Tortoise Creates New Energy Fund
May 31 - The Kansas City Star (Kansas City, Missouri)
Tortoise Capital Advisors LLC in Overland Park has launched a second fund that invests in energy partnerships.
Tortoise Capital also manages the Tortoise Energy Infrastructure Corp., which
first sold shares to investors in February 2004. Its shares closed Friday at
$28.46, up 8 cents.
Both Tortoise funds invest their money principally in publicly traded
partnerships that focus on energy infrastructure. These can include Ferrellgas
Partners LP in Overland Park and Inergy LP in Kansas City.
The two funds differ in the mix of their assets.
The older Tortoise Energy Infrastructure will invest at least 70 percent of
its money in equity of the energy partnerships, including no more than 30
percent in private securities and no more than 25 percent in bonds of the
partnerships.
The new Tortoise Energy Capital fund will invest at least 80 percent in
equity of energy partnerships, including up to 50 percent in privately placed
securities. It won't invest more than 20 percent of its money in bonds of the
partnerships.
Both funds seek a high level of total return with an emphasis on current
payments to shareholders, their prospectuses said.
The two closed-end energy funds are different from traditional mutual funds
sold by companies such as Fidelity, Vanguard and American Century.
The Tortoise shares trade on the New York Stock Exchange alongside shares of
public companies, such as General Electric Co. and Ford Motor Co., and other
closed-end funds. Investors either buy shares at the initial offering or buy
them from other investors later on.
By contrast, traditional mutual funds create new shares to sell to new
investors and redeem shares of investors who sell. Investors in mutual funds
don't sell shares to each other.
Closed-end fund shares also frequently trade at prices lower than their net
asset value, or the value of the investments the funds hold. They also can trade
at a premium. A traditional mutual fund prices its shares at the net asset value
of the fund the day the shares are sold or redeemed.
The Tortoise funds also can increase their holdings by borrowing money to
invest.
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