Sold RQI (1% Allocation)

Sold my 1% allocation to RQI. I still like RQI, but I bought it at a discount to NAV, and that discount has shrunk to almost zero. The appreciation was just fortunate timing. I retain an allocation to real estate via RLTY and IYRI.

Reduced ASGI (from 2.4% to 1%)

If I “like” RQI, then I “love” ASGI. Infrastructure and global exposure have been good to this fund. A total return of 63% since purchasing this fund in July 2024 was, like RQI, fortunate timing. The result is a price that’s now 6% above the Net Asset Value of the fund. That’s almost a record high for ASGI. The yield is still attractive at 11%, which makes trimming this one a difficult decision (which is why I didn’t sell it all). However, I needed some cash to buy MLPI, and believe there’s a good chance I’ll be able to increase my ASGI position again in the future at a better price.

Increased MAIN (from 0.8% to 1.9%)

MAIN is always the most expensive BDC on a Price to NAV basis. It’s never “cheap” because it has a long history of consistent distributions and outperforming the S&P 500, as explained in this recent review. 

Last September it was trading at 2 x NAV…nose bleed territory! I was hoping to buy it at, or below 1.5xNAV, but 1.55xNAV was close enough. I didn’t catch the bottom, but am still happy with the price (I paid $51.79 and it bottomed out at just below $51 intraday). If it dips below 1.5x NAV, I’m open to buying more. As I write this, it’s trading at 1.64xNAV. MAIN and RQI offer a similar yield (approx 8% including supplemental dividends), but I anticipate MAIN to offer more upside over the long term.

Bought MLPI (1.4% Allocation)

Energy stocks have done well recently because the Iran war has elevated the price of oil and gas. The largest beneficiaries are the upstream O&G producers like Exxon and Chevron, however, they’re sensitive to price changes….something I can’t predict.

Given the challenges facing the supply of oil and gas sourced in the Middle East, I expect that the demand for North American oil and gas will remain high. Midstream revenue is driven by volume, and less sensitive to O&G pricing than the upstream producers.

MLPI holds a similar portfolio to the lower yielding, but successful funds: MLPX and ENFR. It then adds its options strategy (actively selling call options) to boost yield to approx 14% as explained in this recent interview with Garrett from NEOS.

It’s a relatively new fund, however, I’m familiar with the NEOS options strategy, and there’s plenty of (good) performance history to review for MLPX and ENFR.

My goal for this fund is not further appreciation (it has already appreciated significantly), but rather to collect a high yield based on the continued demand for North American oil & gas. The addition of MLPI to existing holdings (EMO and NML), increases the total midstream exposure of the portfolio to 5.6%.

If you’d like to go even deeper on MLPI, this analysis by Power Hedge on Seeking Alpha compares it to other energy funds, and examines the Merqube index that the portfolio is based on.