I agree completely. Way over exposed. There are much better MLP's to have in the top 5 holdings of an actively managed etf.
At the current $7.75 share price and annual dividend of $2.08 AMZA has a yield of 26.8%. Is the current dividend sustainable? Their top five holdings making up 51% of their portfolio only has a current yield of 11%. With only 15% leverage can they really make up the difference with their option positions?
I was a little surprised to discover that AMZA a ETF uses leverage to boost yield. Not good. I got out of this one around back around $10 with a fractional gain and will wait for the oil supply glut to end before getting back in.
If oil recovers the MPLs owned by the fund could go right back up but the price of the fund will lag if they have deleveraged on the way down. Yes it will go up but not to where it was pre oil crash.
The next conference call with the fund managers should be interesting. They were pretty upbeat on the last one when CTR and their other MLP funds were twice their current price.
I believe they are actively deleveraging as the price of the fund continues to fall. We are never going to see a report where they are over the limit.
Actually it might be lower, a lot lower. This fund is leveraged and might have to sell assets to remain complaint with the SEC borrowing limits. If they have to sell shares they wont have the same income to pay the current distribution.
Because rates will have to rise substantially before the underlying preferred's they own will have to raise their payouts.
My guess is this thing will not come back. They are probably over the allowed amount of leverage that can be used and will have to sell assets (shares) to stay under. After doing this they won't have the income to maintain the distribution and the share price will remain under selling pressure.
It is hard to figure what price this security would bring if they did call it. Any way to figure it out?