The Goldman Sachs MLP and Energy Renaissance Fund (GER), a closed-end mutual fund, fell 1.8% in the week ended September 4. The broad-market SPDR S&P 500 ETF Trust (SPY) fell 3.4% and the Energy Select Sector SPDR ETF (XLE) fell 3.0% during the week. The Alerian MLP Index (AMZ) fell 2.7%. In comparison, the Kayne Anderson MLP Investment Company (KYN) fell 1.9% in the week.
KYN had outperformed GER for the previous two weeks, ending August 21 and August 28. We discussed KYN in the previous part of this series.
The Goldman Sachs MLP and Energy Renaissance Fund invest at least 80% of its assets in MLPs and energy investments. The fund intends to keep its holdings in MLPs directly exposed to oil price movements at a minimum. The fund currently focuses on midstream MLPs. However, it may invest in upstream and downstream companies when it believes that commodity prices have reached projected long-term sustainable levels. GER may invest up to 20% of its managed assets in domestic and global equities, bonds, and derivatives that aren’t MLPs or other energy investments.
GER has net assets of $877 million, and it uses leverage. Of its total managed assets, 29% are borrowed funds. GER charges a 1% management fee on managed assets. Formed in September 2014, the fund seeks high total returns with a focus on current distributions.
GER compares its performance against the Alerian MLP Total Return Index (AMZX). While the Alerian MLP Index (AMZ) measures only price returns on the index portfolio, the AMZX measures total returns on the same portfolio. We discussed AMZ previously in this series. AMZX fell 2.7% last week.
The above graph compares GER’s weekly returns with those of the JPMorgan Chase Alerian MLP Index ETN (AMJ), AMZX index, and XLE. All of these returns include dividends.
Energy Transfer Partners (ETP), NuStar Energy (NS), Targa Resources Partners (NGLS), Crescent Point Energy (CPG), and Teekay Offshore Partners (TOO) are GER’s top five holdings. Together, these five MLPs form ~45% of GER. To learn more about energy MLP ETFs, ETNs, and funds, please visit Market Realist’s Energy MLP page.