Energy Infrastructure: The Overlooked Income Play | Tim Kramer

In a recent episode of “Behind the Ticker,” Tim Kramer, founder of CNIC Funds, shares his extensive background in the energy industry and the innovative approach behind CNIC’s latest offering. Kramer, who has been in the energy sector since 1997, brings a wealth of experience from working with various energy companies and a private equity firm where he managed commodity exposure. This diverse background led him to identify a gap in the market: the lack of electricity in commodity indexes. To address this, Kramer and his team created the first-ever electricity index and subsequently launched the AMPD ETF (ticker: AMPD) in May 2023.Kramer explains that CNIC’s electricity index is a groundbreaking development, given that electricity is the most consumed commodity in the U.S. but was previously absent from major commodity indexes like the Bloomberg Commodity Index (BCOM) and the Goldman Sachs Commodity Index (GSCI). The AMPD ETF provides direct exposure to electricity futures, which are traded on the Intercontinental Exchange (ICE). By including electricity in an investable format, CNIC aims to offer investors a new way to diversify their portfolios and hedge against inflation, given electricity’s significant impact on CPI and overall economic activity.One of the unique aspects of the AMPD ETF is its carbon-neutral status. Kramer elaborates on the use of carbon offsets in the fund, ensuring that its operations align with environmental sustainability goals. The ETF purchases carbon offsets corresponding to the electricity futures it holds, making it compliant with SFDR Article 8 standards in Europe. This approach not only addresses investor concerns about environmental impact but also positions the ETF as a forward-thinking product in the commodities market.Kramer also highlights the strategic and tactical benefits of investing in the AMPD ETF. Strategically, it provides long-term exposure to the electrification of America, encompassing trends like AI, electric vehicles, and increased demand for renewable energy. Tactically, it offers a compelling investment due to current market conditions, where demand for electricity is rising, supply is constrained, and the grid’s reliability is increasingly volatile. Moreover, the fund’s structure, which parks a significant portion of its assets in three-month treasuries, allows investors to earn a risk-free rate while maintaining full notional exposure to electricity futures.As CNIC Funds continues to grow, Kramer emphasizes their approach to marketing and distribution, focusing on partnerships with established platforms to leverage their exclusivity on the electricity index data. This strategy aims to maximize the fund’s reach and capitalize on the unique market position of offering the first electricity-focused commodity ETF. For more information, investors can visit CNIC’s website at CNICFunds.com, where they can access white papers, podcasts, and other educational resources about the AMPD ETF and the broader electricity market.Get Brad's daily market research: Subscribe to The Signal at thorft.com/newsletterMore episodes: thorft.com/podcast