USCF Midstream Energy Income Fund (UMI)

Summary of USCF Midstream Energy Income Fund (NYSE Arca: UTF)

Profile:

• Primary Focus: Invests in midstream energy infrastructure companies in the United States, seeking to provide current income and capital appreciation.
• Asset Allocation: Primarily holds equity securities of master limited partnerships (MLPs) and corporations engaged in midstream energy infrastructure.
• Investment Strategy: Actively managed, seeking to invest in companies with attractive valuations, strong distribution growth potential, and favorable long-term fundamentals.

Objective:

• To provide investors with high current income and capital appreciation from investments in the midstream energy infrastructure sector.

Issuer:

• Company: USCF Investments LLC
• Reputation and Reliability: USCF Investments is a privately held investment management firm founded in 2004. It manages several exchange-traded funds focusing on energy, infrastructure, and real estate. The firm has a good reputation and is known for its active management approach.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in the energy and infrastructure sectors.

Market Share:

• UTF has a market share of approximately 0.5% in the midstream energy infrastructure ETF market.

Total Net Assets:

• As of November 7, 2023, UTF has total net assets of approximately $215 million.

Moat:

• Active Management: The ETF benefits from active management, allowing for a more flexible and potentially more rewarding approach compared to passively managed funds.
• Experienced Management Team: The experienced portfolio managers have a strong track record of identifying undervalued companies in the midstream energy sector.
• Focus on High-Yielding Assets: The portfolio focuses on MLPs and other high-yielding securities, providing attractive income potential for investors.

Financial Performance:

• Over the past 3 years, UTF has generated an annualized total return of 12.8%.
• The ETF outperformed its benchmark index, the Alerian MLP Infrastructure Index, over the same period.

Growth Trajectory:

• The midstream energy infrastructure sector is expected to benefit from the growing demand for energy transportation and storage.
• UTF's focus on high-yielding assets and its experienced management team positions it well to capitalize on these growth trends.

Liquidity:

• Average Trading Volume: Approximately 21,000 shares per day.
• Bid-Ask Spread: Around 0.15%.

Market Dynamics:

• Favorable: Growing demand for energy infrastructure, rising oil and gas production, and supportive regulatory environment.
• Challenges: Volatility in energy prices, potential interest rate hikes, and geopolitical risks.

Competitors:

• Alerian MLP ETF (AMLP)
• VanEck Vectors MLP Index ETF (MLPA)
• JPMorgan Alerian MLP Index ETN (AMJ)

Expense Ratio:

• 0.89% per year.

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on high-yielding MLPs and corporations with strong distribution growth potential.
• Composition: Primarily invests in equity securities of midstream energy infrastructure companies.

Key Points:

• High income potential with a current distribution yield above 8%.
• Actively managed with a focus on undervalued opportunities.
• Experienced management team with a strong track record.
• Potential for long-term capital appreciation.

Risks:

• Volatility: The ETF is exposed to volatility in energy prices and the broader market.
• Interest Rate Risk: Rising interest rates could make MLPs less attractive.
• Liquidity Risk: The ETF is relatively small and may have limited liquidity.

Who Should Consider Investing:

• Income-oriented investors seeking high current income.
• Investors with a long-term investment horizon.
• Investors comfortable with the risks associated with the energy sector.

Fundamental Rating Based on AI: 7.5/10

Justification:

UTF demonstrates strong fundamentals, supported by its active management, experienced portfolio managers, and focus on high-yielding assets. The ETF's performance has outpaced its benchmark, and its growth prospects appear favorable. However, the relatively small market size and the risks associated with the energy sector warrant consideration. Overall, UTF is a well-managed fund with a compelling income and growth profile, making it a suitable option for income-oriented investors with a long-term perspective on the midstream energy infrastructure sector.

Resources and Disclaimers:

• USCF Midstream Energy Income Fund website: https://www.uscfinvestments.com/etf/utf/
• Morningstar: https://www.morningstar.com/etfs/arcx/utf
• ETF Database: https://etfdb.com/etf/utf/
• Disclaimer: The information provided above is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making any investment decisions.