First Energy Infrastructure Trust – GuruFocus.com

First Trust Energy Infrastructure Fund (the “Fund”) (NYSE: FIF) declared the regular monthly distribution of common shares of the Fund in the amount of $0.0625 per share payable on February 15, 2022 to shareholders of record on February 2 2022 The ex-dividend date is expected to be February 1, 2022. Information on the Fund’s monthly distribution is shown below.

First Trust Energy Infrastructure Fund (FIF):

Breakdown per share:

$0.0625

Distribution rate based on the January 19, 2022 net asset value of $15.70:

4.78%

Distribution rate based on January 19, 2022 closing price of $14.01:

5.35%

The Board of Directors of the Fund has approved a managed distribution policy for the Fund (the “Plan”) based on an exemption received from the Securities and Exchange Commission which permits the Fund to make periodic capital gains distributions term as frequently as monthly each tax year. Under the plan, the Fund intends to continue to pay its recurring monthly distribution of $0.0625 per share which reflects the Fund’s distributable cash flow. Part of this monthly distribution may include long-term capital gains. This may result in a reduction in the required long-term capital gains distribution at the end of the year by distributing long-term capital gains throughout the year. The annual distribution rate is independent of the performance of the Fund over a given period. Accordingly, you should not draw any conclusions about the investment performance of the Fund from the amount of any distribution or the terms of the Plan.

The distribution may consist of net investment income earned by the Fund, net short and long term capital gains and/or tax-deferred return of capital. The tax-deferred return of capital, if any, is primarily due to the tax treatment of cash distributions made by the Master Limited Partnerships (“MLPs”) in which the Fund invests. The final determination of the source of tax status of all 2022 distributions will be made after the end of 2022 and will be provided on Form 1099-DIV.

The Fund is a non-diversified, closed-end investment company that seeks to provide high total return with an emphasis on current distributions to shareholders. The Fund seeks to achieve its investment objectives by investing primarily in securities of companies active in the energy infrastructure sector. These companies primarily include publicly traded MLPs and limited liability companies taxed as partnerships, affiliates of MLPs, YieldCos, pipeline companies, utilities and other companies that derive at least 50% their revenue from operating or providing services in support of infrastructure assets such as pipelines, power transmission, and oil and natural gas storage in the petroleum, natural gas, and power generation (collectively, the “Energy Infrastructure Companies”). To generate additional income, the Fund intends to write (or sell) covered call options on up to 35% of the assets under management held in the Fund’s portfolio.

First Trust Advisors LP (“FTA”) is a federally registered investment adviser and acts as the investment adviser to the Fund. FTA and its affiliate First Trust Portfolios LP (“FTP”), a FINRA-registered broker, are private companies that provide a variety of investment services. FTA has collective assets under management or supervision of approximately $223 billion as of December 31, 2021 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and accounts managed separately. FTA is the supervisor of the First Trust unit investment trusts, while FTP is the sponsor. FTP is also a distributor of UCITS units and UCITS creation units. FTA and FTP are based in Wheaton, Illinois.

Energy Income Partners, LLC (“EIP”) acts as the investment sub-advisor to the Fund and provides advisory services to a number of investment companies and partnerships for the purpose of investing in MLPs and other energy infrastructure securities. EIP is one of the first investment advisers specializing in this field. As of December 31, 2021, EIP managed or oversaw approximately $4.6 billion in client assets.

Main risk factors: Past performance is no guarantee of future results. Investment returns and the market value of an investment in the Fund will fluctuate. Stocks, when sold, may be worth more or less than their original cost. There can be no assurance that the Fund’s investment objectives will be achieved. The Fund may not be suitable for all investors.

The securities held by a fund, as well as the shares of a fund itself, are subject to market fluctuations caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived security price trends. A fund’s shares could lose value or underperform other investments because of the risk of loss associated with these market movements. In addition, local, regional or global events such as war, acts of terrorism, the spread of infectious diseases or other public health issues, recessions or other events could have a material adverse impact on a funds and their investments. Such events may affect certain geographies, countries, sectors and industries more significantly than others. The outbreak of the respiratory disease referred to as COVID-19 in December 2019 caused significant volatility and decline in global financial markets, resulting in losses for investors. While vaccine development has slowed the spread of the virus and allowed “reasonably” normal business activity to resume in the United States, many countries continue to impose containment measures in an attempt to slow the spread. Moreover, there is no guarantee that the vaccines will be effective against emerging variants of the disease.

The Fund is subject to risks, in particular because it is a non-diversified closed-end investment company.

Since the Fund is concentrated in securities issued by energy infrastructure companies, it will be more sensitive to adverse economic or regulatory events affecting this industry, including high interest costs, high debt costs, effects of the economic downturn, excess capacity, increased competition, uncertainties regarding the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors. Investments in securities of MLP involve certain risks different from or in addition to the risks of investing in common stocks. The number of energy-related MLPs has been declining since 2014. The industry is witnessing the consolidation or simplification of corporate structures where the capital sleeve of MLPs is being eliminated. As a result of the foregoing, the Fund’s MLP investments may become less diversified and the Fund may increase its non-MLP investments in accordance with its investment objective and policies. Changes in tax laws or regulations, or future interpretations thereof, could adversely affect the Fund or the MLPs, MLP-related entities and other energy and utility companies in which the Fund invests.

The Fund invests in securities of non-US issuers which are subject to greater volatility than securities of US issuers. Since the Fund invests in non-US securities, you may lose money if the local currency of a non-US market depreciates against the US dollar.

There can be no assurance that part of the distributions paid to holders of common shares of the Fund will consist of tax-efficient eligible dividend income.

To the extent that a fund invests in floating or variable rate bonds which use the London Interbank Offered Rate (“LIBOR”) as its benchmark interest rate, it is subject to LIBOR risk. The UK Financial Conduct Authority, which regulates LIBOR, will cease offering LIBOR as a benchmark rate during a phase-out period beginning immediately after December 31, 2021. The unavailability or replacement of LIBOR may affect the value, liquidity or yield on certain fund investments and may result in costs incurred in closing positions and entering into new transactions. Any potential effects of the transition from LIBOR on the fund or on certain instruments in which the fund invests may be difficult to determine, and may vary depending on various factors, and could result in losses for the fund.

As the writer (seller) of a call option, the Fund renounces, during the term of the option, the possibility of benefiting from increases in the market value of the portfolio security covering the option beyond the sum of the premium and the strike price of the call option, but retains the risk of loss if the price of the underlying security declines. The value of call options written by the Fund may be adversely affected if the option market is reduced or becomes illiquid. There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position.

If short-term interest rates are lower than the Fund’s fixed payment rate on an interest rate swap, the swap will reduce net earnings on common shares. In addition, a default by the counterparty to a swap transaction could also adversely affect the performance of the Common Shares.

The use of leverage may involve additional risks and costs and may magnify the effect of any loss.

The risks linked to an investment in the Fund are specified in the reports to shareholders and other regulatory documents.

The information presented is not intended to constitute an investment recommendation or advice to any particular person. By providing this information, First Trust does not represent itself as giving advice in a fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Finance professionals are responsible for independently assessing investment risks and exercising independent judgment in determining whether investments are appropriate for their clients.

The Fund’s daily closing price on the New York Stock Exchange and net asset value per share and other information can be found at https%3A%2F%2Fwww.ftportfolios.com or by calling 1-800-988- 5891.

See the source version on businesswire.com: https://www.businesswire.com/news/home/20220120005992/en/

Comments are closed.