Why energy and energy infrastructure?
Investing in energy may help provide a diversified source of returns, plus has the potential to generate an attractive level of income and higher growth.
The long-term trends of rising global energy consumption, increased focus on climate change and growing U.S. crude oil and natural gas supplies will drive significant need for natural resource and infrastructure investment in the coming years.
Source of income
Investing in the equity and debt securities of private and public energy and energy infrastructure companies may provide attractive levels of current income.
Energy may provide a unique opportunity to generate income¹

Diverse investment opportunity
Energy and energy infrastructure companies represent a large opportunity for income and growth.

Energy market breakdown2
|
|
---|---|
$1T
|
Upstream
|
$275B
|
Midstream (C-corp)
|
$193B
|
Midstream (MLP)
|
$1T
|
Power
|
$203B
|
Renewables
|
$58B
|
Services + equipment
|
$112B
|
Downstream
|
$940B
|
Credit
|
The energy industry is broad and diverse, with several large subsectors that are instrumental to ensuring the uninterrupted flow of and access to energy.
Significant investment capital is required to replace and grow drilling inventory that depletes over time. In general, cash flows are closely tied to commodity prices, including oil and natural gas.
Midstream companies support the daily flow of energy products across the U.S. and around the world. They operate critical infrastructure responsible for gathering, processing, transporting, marketing, storing and delivering energy products to demand markets.
Downstream businesses refine, market and distribute oil and natural gas products, such as gasoline, diesel and jet fuel, to end users. Companies operating in this segment include oil refineries, retail gasoline stations, petrochemical facilities and wholesale distributors.
The service and equipment industry provides a broad array of supporting services and products to aid in every step of the energy life cycle. Oilfield services companies represent the largest of the service and equipment sectors.
The power sector generates and distributes electricity to downstream customers including residential, commercial and industrial buyers.
Flexibility to invest across the energy value chain
Because each subsector can perform differently year to year, having the flexibility to move across the energy value chain as market opportunities change may help to smooth portfolio returns and improve portfolio diversification.
Annual returns for energy subsectors³

Investor considerations
Investing in energy and energy infrastructure companies may contain certain risks.
Commodity price risk: The profitability of energy and energy infrastructure companies, particularly those involved in exploration and production, may be materially affected by the price of commodities such as crude oil and natural gas.
Cyclicality risk: The operating results of energy companies tend to be cyclical. The highly cyclical nature of energy and energy infrastructure companies may adversely affect the earnings or operating cash flows of such companies.
Energy demand risk: A sustained decline in demand for natural resources, including, but not limited to, crude oil, refined products, petrochemicals, natural gas, natural gas liquids, coal, metals and renewable energy sources could adversely affect the revenues and cash flows of energy and energy infrastructure companies.
Regulatory risk: Energy and energy infrastructure companies are subject to stringent and complex federal, state and local environmental laws and regulations, which could restrict business activity and increase compliance costs for energy companies.