In this episode of Behind the Ticker, Brad Roth sits down with Rob Thummel, Senior Portfolio Manager at Tortoise Capital Advisors, to dive into the firm’s active ETF, the Tortoise Essential Energy Fund (Ticker: TPZ). Rob shares his decades-long journey in the energy sector—from working in gas stations and oilfields as a teenager to helping lead one of the most focused energy investment firms in the country. Tortoise Capital is devoted entirely to energy, aiming to deliver superior risk-adjusted returns by investing across the full spectrum of the sector, including infrastructure, utilities, and renewables—not just traditional oil and gas producers.
About Rob Thummel and Tortoise Capital
TPZ, which recently transitioned from a closed-end fund to an active ETF, offers investors a dynamic approach to the evolving energy landscape. Rob explains how the fund is positioned to capture opportunities stemming from electrification and increased U.S. energy exports, with particular focus on natural gas and liquid infrastructure. He emphasizes that energy is no longer just about oil—natural gas and electricity are central to powering data centers and AI advancements, and TPZ is designed to align with that megatrend.
Investment Strategy and Approach
The portfolio maintains an active share of 86%, reflecting its substantial divergence from traditional benchmarks like the S&P Energy Index or ETFs like XLE. TPZ typically holds 80-90% in equities and 10-20% in fixed income, with additional option overlays to generate income and reduce volatility. Rob describes the fund’s hybrid approach—combining top-down macro analysis with bottom-up fundamental research—to find undervalued names with strong cash flows and management quality.
With a current dividend yield of about 5% and one-year performance exceeding 40%, TPZ has outpaced many passive energy benchmarks by leaning into secular shifts and tactically avoiding cyclical pitfalls. Rob positions TPZ as a core energy allocation for diversified portfolios, not just for total return potential, but for its robust income stream and long-term exposure to the energy-AI convergence.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Rob Thummel covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
Focus on the energy sector. Really, I've always seen a huge opportunity in the energy sector because of the essential nature of it. And so our goal obviously is to deliver the highest risk of just returns we can for clients because energy is so important. Obviously, there's a lot going on in energy and frankly, you know, there are a lot of market cycles in energy, a lot of market cycles in general in the broad market. But our goal is to position clients we think or the best opportunities are in the energy sector.
Our active ETF can identify the future opportunities and where the puck is going in energy and move there and move there quickly and that's and that's that's what we've done and that's really helped us. Really propel us and and provide that that that return that excess return over and beyond over and beyond what the index has has delivered. So here's a million dollar question right for someone already has or is building a diversified model portfolio. What role do you see TPC playing you know should investors view it as a core energy allocation should they look at it is an income generating sleeve or maybe more of an opportunistic position.
Market Context and Positioning
And because there's there is no way AI without AI there's no AI without energy infrastructure and so that that that that's that's what we're really excited about because we think to say. AI opportunities a long term secular trend it offers a catalyst for the energy sector a growth catalyst for the energy sector so energy is already providing a lot of. stable income for for investors and and that's not going away but now we've got the end we've got income and now we've got a growth catalyst that I think well really position a sector going for.
In a period of declining commodity prices to actually be a little defensive but also be in an early stage growth story that's really not been fully recognized by the stock market yet. So let's take a look at performance I looked at performance the fun as a one year return of over 40% so first of all congratulations. Can you talk about a little bit about one of the key drivers that help propel that return over last year. Yeah so so what I would say is you have the energy sectors is made people listen as called no and may and may be even share this view has been really under invested and and I think really under appreciated for for a series of years really all the way back to 2020.
Notable Insights
"Actually got rid of the discounts for the for the closed end fund shareholders consolidated a you know, you get now you got to benefit a scale a bit with now one active ETF and like I said gives us the opportunity now to look forward and and and and really position the portfolio."
"But there's a lot going on in the energy sector and that's that's that's what I like to say is that's why tortoise."
Key Takeaways
- TPZ, which recently transitioned from a closed-end fund to an active ETF, offers investors a dynamic approach to the evolving energy landscape.
- Rob explains how the fund is positioned to capture opportunities stemming from electrification and increased U.S.
- He emphasizes that energy is no longer just about oil—natural gas and electricity are central to powering data centers and AI advancements, and TPZ is designed to align with that megatrend.
- TPZ typically holds 80-90% in equities and 10-20% in fixed income, with additional option overlays to generate income and reduce volatility.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Rob Thummel highlights important considerations around energy. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of energy and fixed income discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Rob Thummel, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.