Vertical Capital Markets Group has launched an energy fund to help tap growing demand for energy infrastructure in the US as the world’s largest economy produces more oil.
The fund, called Vertical Capital Innovation MLP Energy Fund, will be sub-advised by Capital Innovations of Pewaukee, Wisconsin, the company said in a statement.
A booming oil sector in the US will see greater need for energy infrastructure, which will be “a boon” for master limited partnerships (MLPs), Vertical Capital’s executive vice president John Harline said.
MLPs investing in the energy industry are likely to become even more popular as the hydraulic fracturing, or fracking, industry continues to bring the US closer to energy independence, Vertical Capital’s president Bayard Closser said, adding that efforts to make Europe less dependent on Russian oil may provide an additional boost to the energy boom.
The U.S. Energy Information Administration forecasts that shale oil sales may exceed $40 billion this year, up from $36 billion in 2013, according to the statement.
MLPs have been favoured by investors in recent years thanks to their high yields and tax advantages. There are about 130 MLPs listed on major exchanges in the US, and they have a total market capital of $500 billion, according to the statement.
Vertical Capital said it chose Capital Innovations as the sub-advisor for the energy fund because of the firm’s extensive real asset experience and investment performance.
CIO and Michael Underhill of Capital Innovations and portfolio manager Susan Dambekaln will oversee overall construction and implementation of the MLP Energy Fund portfolio, the statement said.