MLPDX
Invesco SteelPath MLP Income-A
High-Yield Income Potential
The Invesco SteelPath MLP Income-A fund, ticker symbol MLPDX, is designed to generate a high level of inflation-protected current income. This is primarily achieved through investments in larger, more liquid energy Master Limited Partnerships (MLPs). With a yield of 7.17%, the fund is particularly attractive to income-focused investors seeking substantial returns in the form of dividends. The fund’s strategy of investing at least 90% of its net assets in equity securities of energy MLPs ensures a steady stream of income, making it a compelling choice for those looking to hedge against inflation while benefiting from the energy sector’s growth.
At A Glance
Executive Summary
MLPDX offers high-yield income through energy MLPs with a 7.17% yield, but has a high expense ratio of 6.56%.
High yield of 7.17% for income-focused investors.\nStrong exposure to energy sector MLPs.\nPotential for inflation-protected income.
High expense ratio of 6.56%.\nNegative risk metrics like alpha and Sharpe ratio.\nLimited diversification outside energy sector.
Sector Concentration in Energy
MLPDX is heavily concentrated in the energy sector, with 97.61% of its portfolio allocated to energy-related investments. This focus on energy MLPs allows the fund to capitalize on the sector’s potential for growth and income generation. The top holdings include MPLX LP Partnership Units, Energy Transfer LP, and Western Midstream Partners LP, which together form a significant portion of the fund’s assets. This concentration provides investors with exposure to some of the largest and most liquid MLPs in the market, offering both stability and potential for capital appreciation. However, this also means that the fund’s performance is closely tied to the energy market’s fluctuations.
Expense Ratio Considerations
One of the critical considerations for potential investors in MLPDX is its high expense ratio of 6.56%. This is significantly higher than many other funds in the same category, which could impact net returns. While the fund offers a high yield, the elevated expense ratio may deter cost-conscious investors. It’s essential for investors to weigh the benefits of the fund’s income potential against the costs associated with its management. The high expense ratio reflects the specialized nature of the fund’s investments and the active management required to maintain its portfolio of energy MLPs.
Risk Metrics and Performance
MLPDX exhibits several risk metrics that investors should consider. The fund has a negative alpha of -7.76%, indicating it has underperformed its benchmark, the MSCI World DivAdj Index. Additionally, the Sharpe ratio of -0.66 suggests that the fund has not been able to generate returns commensurate with its risk. The beta of 0.74 indicates lower volatility compared to the benchmark, but the negative Treynor ratio of -10.43 highlights inefficiencies in risk-adjusted returns. Despite these metrics, the fund has shown strong annualized returns over the past year, with a one-year return of 23.87%, suggesting potential for recovery and growth.
Comparative Analysis with Similar Funds
When compared to similar funds, MLPDX presents a mixed picture. For instance, the Invesco SteelPath MLP Select 40-A (MLPFX) has a higher one-year return of 32.93% and a much lower expense ratio of 0.0659%. Similarly, the Invesco SteelPath MLP Alpha Plus-A (MLPLX) boasts a one-year return of 49.81% with a lower expense ratio. These comparisons highlight the competitive landscape within the energy MLP fund category and suggest that while MLPDX offers a high yield, there are other options with potentially better cost efficiency and performance. Investors should consider these factors when evaluating MLPDX against its peers.
Market Cap and Asset Allocation
The fund’s market cap allocation is predominantly in medium-sized companies, accounting for 52.27% of its portfolio. This focus on medium-cap MLPs provides a balance between growth potential and stability. Additionally, the fund’s asset allocation is heavily skewed towards U.S. equity, with a notable allocation of 110.53%, indicating a leveraged position. This aggressive stance may appeal to investors looking for high growth potential, but it also introduces additional risk. The fund’s cash position is negative, which could be a concern for those seeking liquidity and stability in their investments.
Max Drawdown and Recovery Analysis
MLPDX experienced a maximum drawdown of -6.4%, with a relatively short drawdown length of one period and a recovery length of two periods. This indicates that while the fund has faced significant declines, it has also demonstrated the ability to recover quickly. The peak date of the drawdown was July 22, 2024, with the valley date on August 5, 2024. This resilience in the face of market volatility may be appealing to investors who are concerned about downside risk. However, the fund’s downside risk (UI) of 1.93% suggests that there is still potential for further declines, which investors should consider when assessing the fund’s risk profile.
Conclusion: Suitability for Income-Focused Investors
In conclusion, the Invesco SteelPath MLP Income-A fund offers a high-yield investment opportunity for those focused on income generation, particularly within the energy sector. Its substantial yield of 7.17% and focus on larger, more liquid MLPs make it an attractive option for investors seeking inflation-protected income. However, the high expense ratio and negative risk metrics may be a deterrent for some. The fund is best suited for investors who are comfortable with the risks associated with concentrated energy investments and are seeking to capitalize on the sector’s income potential. As always, investors should carefully consider their risk tolerance and investment objectives before committing to this fund.
Similar Securities
MLPLX: Invesco SteelPath MLP Alpha Plus-A | High-Return Energy Investment
MLPLX offers high returns with a 49.87% 1-year return, focusing on energy LPs. Its unique asset allocation and high alpha make it stand out.
MLPAX: Invesco SteelPath MLP Alpha-A | High-Yield Energy Infrastructure Fund
MLPAX offers high yield and growth in energy MLPs with a 5.02% yield and 42.45% 1-year return, but has a high 3.11% expense ratio.
MLPDX: Invesco SteelPath MLP Income-A | High-Yield Energy MLP Investment
MLPDX offers high-yield income through energy MLPs with a 7.17% yield, but has a high expense ratio of 6.56%.
MLPFX: Invesco SteelPath MLP Select 40-A | High-Yield Energy MLP Fund
MLPFX offers high yield and diversified energy MLP exposure, outperforming its benchmark with a 32.96% 1-year return.
Futher Reading
https://finance.yahoo.com/quote/MLPDX/”>Yahoo: Invesco SteelPath MLP Income-A
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