The Strategy Behind Tortoise Capital’s Modern Energy ETF
Energy is no longer a niche or tactical allocation; it is a strategic investment. It’s an essential component of today’s economy, and it deserves a strategic place in your clients’ portfolios.
At Tortoise Capital, we designed the Tortoise Energy Fund (TNGY) to reflect this evolution and provide advisors like you with a more effective tool for accessing the full energy opportunity set.
In this post, we’ll take you behind the strategy: why TNGY was built, what makes it different, and how it addresses the real-world needs of advisors and their clients.
A Broader Definition of Energy, Built for Today’s Market
The energy sector has evolved. While traditional strategies often focus narrowly on upstream oil producers or MLPs, today’s investable energy landscape is significantly more diverse.
It now includes:
- Liquefied natural gas (LNG) export terminals
- Midstream pipelines and storage
- Regulated utilities
- Natural gas liquids (NGLs)
- Renewable integration and power infrastructure
These are the essential arteries of global energy supply, and they represent real opportunities for yield, growth, and inflation mitigation. TNGY was built to capture this broader definition, providing exposure across the energy value chain, not just one segment of it.
This holistic approach enables advisors to deliver more diversified, income-focused, and sector-aligned energy allocations for 2025.
Designed with Advisor and Client Needs in Mind
TNGY is more than an ETF; it’s a strategy designed to meet real advisor and investor priorities. At its core, the fund seeks to provide consistent, tax-efficient income while maintaining the flexibility to adapt across sectors and market cycles.
Some key structural benefits include:
- ETF format with 1099 tax reporting (no K-1s)
- Quarterly distributions
- In-kind redemptions to support tax efficiency
- Diversified income sources across real assets, infrastructure, and credit
This structure supports a range of goals: consistent income, inflation sensitivity, risk-aware exposure, and simplified portfolio implementation.
For clients seeking dependable yield or diversification beyond traditional equities and bonds, TNGY offers a thoughtful, professionally managed solution.
Built to Be Flexible. Because Energy Markets Shift
Energy is shaped by both long-term demand drivers and shorter-term market cycles. To help advisors stay ahead of those shifts, TNGY was built with allocation flexibility at its core.
Portfolio managers have the ability to:
- Adjust sub-sector exposures, tilting between upstream, midstream, utilities, refiners, integrateds and renewables based on evolving fundamentals
- Allocate between equity and fixed income, with bonds flexing from 0% to 50%
- Use covered calls selectively, enhancing yield opportunities while maintaining upside potential
Importantly, every decision is backed by bottom-up research and proprietary risk models. The result is a strategy that’s nimble without being speculative, designed to capture opportunities while managing downside exposure.
TNGY vs. the Usual Suspects. What Sets It Apart
While energy ETFs like XLE, VDE, and AMLP remain popular options among many advisors, they tend to focus on narrow segments of the energy sector, often emphasizing commodity-driven equities or a small number of MLPs.
TNGY is different.
- Not narrowly concentrated: The fund spans multiple subsectors and asset types.
- Not commodity-dependent: A focus on fee-based revenue models helps reduce volatility.
- Not just equity: The flexibility to include credit allows for more robust income strategies.
- Not a tactical trade: TNGY is built as a core holding, capable of long-term portfolio contribution.
For advisors, this means greater control, stronger diversification, and more consistent alignment with both client goals and market conditions.
What This Means for You and Your Clients
TNGY is an accessible, comprehensive solution for clients seeking exposure to a modern energy ecosystem, without the complexity of managing individual securities or rotating between multiple funds.
- Income-focused clients may benefit from the potential for steady yield backed by real asset cash flows.
- Growth-minded clients gain access to scalable U.S. export infrastructure and global energy demand trends.
- Diversification seekers find a real asset complement to traditional equity and bond allocations.
Above all, TNGY can help advisors bring energy exposure to client portfolios in a single, tax-efficient ETF.
If you’re looking for a more complete way to allocate to the energy sector, one that reflects today’s market realities and tomorrow’s opportunities, TNGY was built for that.
Important Information
Tortoise Capital Advisors, LLC. (TCA) is the adviser to the Tortoise Energy Fund. TCA is an investment manager specializing in listed energy investments and is experienced in managing portfolios of MLP securities and other energy companies for individual, institutional and closed-end fund investors.
The fund’s investment objective, risks, charges and expenses must be considered carefully before investing. The summary and statutory prospectus contains this and other important information about the fund and may be obtained by calling (855) 994-4437 or visiting etp.tortoisecapital.com/funds/tortoise-essential-energy-fund. Read it carefully before investing.
Additional Comparison Considerations
Investment objectives and strategies will vary greatly among individual ETFs. Before making an investment decision, it’s important to check the fund’s prospectus or offering memorandum for factors such as investment objectives, costs and expenses, liquidity, fluctuation of principal or return, and tax features. All investments contain risk and may lose value. References to comparison funds are for illustrative purposes only and are not intended as recommendations to buy or sell any securities. To obtain a prospectus containing important fund information for the products referenced, please view/download a prospectus here: XLE, VDE, AMLP.
Shares of exchange-traded funds (ETFs) are not individually redeemable and owners of the shares may acquire those shares from the ETF and tender those shares for redemption to the ETF in Creation Units only, see the ETF prospectus for additional information regarding Creation Units. Investors may purchase or sell ETF shares throughout the day through any brokerage account, which will result in typical brokerage commissions.
Investing involves risk. Principal loss is possible. The fund is registered as a non-diversified, open-end management investment company under the 1940 Act.
Accordingly, there are no regulatory limits under the 1940 Act on the number or size of securities that we hold, and we may invest more assets in fewer issuers compared to a diversified fund. An investment in MLP securities involves some risks that differ from the risks involved in an investment in the common stock of a corporation, including risks relating to the ownership structure of MLPs, the risk that MLPs might lose their partnership status for tax purposes and the risk that MLPs will not make distributions to holders (including us) at anticipated levels or with the expected tax character.
We may invest a portion of our assets in fixed income securities rated “investment grade” by nationally recognized statistical rating organizations (“NRSROs”) or judged by our investment adviser, Tortoise Capital Advisors, L.L.C. (the “Adviser”), to be of comparable credit quality. Non-investment grade securities are rated Ba1 or lower by Moody’s, BB+ or lower by S&P or BB or lower by Fitch or, if unrated, are determined by our Adviser to be of comparable credit quality. Investments in the securities of non U.S. issuers may involve risks not ordinarily associated with investments in securities and instruments of U.S. issuers, including different accounting, auditing and financial standards, less government supervision and regulation, additional tax withholding and taxes, difficulty enforcing rights in foreign countries, less publicly available information, difficulty effecting transactions, higher expenses, and exchange rate risk.
Restricted securities (including Rule 144A securities) are less liquid than freely tradable securities because of statutory and contractual restrictions on resale. This lack of liquidity creates special risks for us. Rule 144A provides an exemption from the registration requirements of the Securities Act of 1933 (the “1933 Act”), for the resale of certain restricted securities to qualified institutional buyers, such as the Fund. We cannot guarantee that our covered call option strategy will be effective. There are several risks associated with transactions in options on securities. For example, the significant differences between the securities and options markets could result in an imperfect correlation between these markets. Certain securities may trade less frequently than those of larger companies that have larger market capitalizations. The S&P 500® Index is an unmanaged market-value weighted index of stocks, which is widely regarded as the standard for measuring large-cap U.S. stock market performance. Returns include reinvested dividends. A master limited partnership (MLP) is a limited partnership investment vehicle that is traded on public exchanges. MLPs are traded in units rather than shares and consist of a general partner and limited partners. There are certain tax advantages as well as opportunity for more liquidity. Active share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index.
Risks include, but are not limited to, risks associated with companies owning and/or operating energy pipelines, as well as master limited partnerships (MLPs), MLP affiliates, capital markets, terrorism, natural disasters, climate change, operating, regulatory, environmental, supply and demand, and price volatility risks. The tax benefits received by an investor investing in the fund differ from that of a direct investment in an MLP by an investor. The value of the fund’s investment in an MLP will depend largely on the MLP’s treatment as a partnership for U.S. federal income tax purposes. If the MLP is deemed to be a corporation then its income would be subject to federal taxation, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund’s value. Investments in non-U.S. companies (including Canadian issuers) involve risk not ordinarily associated with investments in securities and instruments of U.S. issuers, including risks related to political, social and economic developments abroad, differences between U.S. and foreign regulatory and accounting requirements, tax risk and market practices, as well as fluctuations in foreign currencies. The fund invests in small and mid-cap companies, which involve additional risks such as limited liquidity and greater volatility than larger companies. Shares may trade at prices different than net asset value per share. A master limited partnership (MLP) is a limited partnership investment vehicle that is traded on public exchanges. MLPs are traded in units rather than shares and consist of a general partner and limited partners. There are certain tax advantages as well as opportunity for more liquidity.
Diversification does not assure a profit or protect against a loss in a declining market.
The Fund expects to pay out dividends based on the Fund’s distributable cash flow which generally represents dividends and distributions from equity investments, interest from debt securities and net premiums from options, less expenses. To the extent distributions exceed net investment income, they will be classified as return of capital and Fund shareholders would experience a reduction in the basis of their shares, which may increase the capital gain or reduce capital loss realized upon the sale of such shares. There is no guarantee that the Fund can or will pay distributions.
Nothing on this brochure should be considered a solicitation to buy or an offer to sell any shares of the portfolio in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction. Nothing contained in this communication constitutes tax, legal or investment advice. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.
TNGY is distributed by Quasar Distributors, LLC which is not affiliated with any other products discussed.
• NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE