Which Energy ETF Stands Out, the Global X MLPX or the First Trust EMLP?

The Global X - MLP & Energy Infrastructure ETF (NYSEMKT:MLPX) offers low-cost, pure-play energy exposure, while the First Trust North American Energy Infrastructure Fund (NYSEMKT:EMLP) provides a diversified utility-heavy strategy with an environmental, social, and governance (ESG) screen.

Investors seeking income from the North American energy boom often weigh these two funds. While both target the infrastructure that moves fuel and power, their internal compositions differ significantly, shifting the risk profile from a concentrated energy focus in MLPX to a broader, utility-oriented approach in EMLP.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Global X - MLP & Energy Infrastructure ETF is the more affordable choice with a 0.45% expense ratio, which is 0.50 percentage points lower than its competitor. This cost advantage is paired with a higher trailing distribution payout.

Performance & risk comparison

What's inside

The First Trust North American Energy Infrastructure Fund holds 65 securities, with a sector allocation heavily weighted toward utilities at 54%, followed by energy at 27%. Its largest positions include Energy Transfer (NYSE:ET) at 7.22% and Enterprise Products Partners (NYSE:EPD) at 6.93%. The fund was launched in 2012. It incorporates an ESG screen to filter its selections of natural gas, electric, and renewable energy companies. The First Trust North American Energy Infrastructure Fund has paid $1.21 per share over the trailing 12 months, which on its recent ~$43.50 share price works out to a 2.80% yield.

The Global X - MLP & Energy Infrastructure ETF maintains a more concentrated portfolio of 29 holdings, with 98% of assets in the energy sector and 2% in industrials. Its largest positions include TC Energy (NYSE:TRP) at 9% and Enbridge (NYSE:ENB) at 8.92%. This fund was launched in 2013. It is designed to track the Solactive MLP & Energy Infrastructure Index, providing exposure to midstream companies and master limited partnerships without the tax complexity of direct partnership ownership. Global X - MLP & Energy Infrastructure ETF has paid $3.04 per share over the trailing 12 months, which on its recent ~$73.66 share price works out to a 4.10% yield.

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What this means for investors

The advent of artificial intelligence has led to growing demand for energy to power the army of computers needed for AI to execute tasks. Suddenly, massive amounts of continuous electricity are required, creating a multi-decade demand supercycle for power.

This makes investing in energy-focused ETFs, such as the First Trust North American Energy Infrastructure Fund (EMLP) and the Global X - MLP & Energy Infrastructure ETF (MLPX), worthwhile. By investing in the physical pipes, power grids, and utilities necessary to power massive AI data centers, these funds offer a way to capitalize on surging electricity and natural gas demand. They take different approaches to the energy sector, so choosing which to invest in depends on the fund’s approach that best meets your goals.

MLPX boasts a higher dividend yield and lower expense ratio, a compelling combination to help you maximize returns. One of its advantages is that, unlike traditional Master Limited Partnerships (MLPs), MLPX avoids fund-level taxes by limiting direct MLP exposure and investing in similar entities instead. Its downsides are that it has fewer holdings, making it less diversified, and it suffers higher volatility, as illustrated by its larger max drawdown over the last five years.

EMLP has a higher expense ratio, but that’s because it is an actively-managed fund, with professional managers making adjustments to navigate market changes. MLPX is passively managed. EMLP includes more holdings, and is less volatile, making it ideal for conservative investors, but the tradeoff is a smaller dividend, which contributes to its lower total return.

Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Enterprise Products Partners and Tc Energy. The Motley Fool has a disclosure policy.