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Energy ETF (CRAK) Hits New 52-Week High

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For investors seeking momentum, VanEck Vectors Oil Refiners ETF (CRAK - Free Report) is probably on radar now. The fund just hit a 52-week high and is up nearly 31.3% from its 52-week low price of $17.89/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

CRAK in Focus

This fund offers global exposure to the largest and most liquid companies involved in crude oil refining, which includes gasoline, diesel, jet fuel, fuel oil, naphtha, and other petrochemicals, or have at least half of their assets devoted to the refining of crude oil. It holds a small basket of 26 stocks with each holding less than 8.3% share. American firms account for 33% share followed by Japan (13.4%). Other countries like India and Poland  receive a single-digit allocation each. The ETF charges a bit higher fee of 59 bps compared to others in the energy space (see: all the energy ETFs here).

Why the Move?

As oil price logged in the worst first-half performance since 1998 that knocked down the entire energy sector, oil refining industry is shining. This is because it is negatively correlated with the price of oil with players in this industry using oil as an input for processing refined petroleum products like gasoline. Thus, lower oil prices are boosting margins for refiners, leading to healthy stock prices. This trend is likely to continue if crude prices (input costs) remain low or continue to fall further, leading to higher spreads. In such a scenario, refiners are expected to outperform the rest of the energy sector.

More Gains Ahead?

The fund might remain strong given a high weighted alpha of 28.73% and a low 20-day volatility of 12.84%. Further, many of the segments that make up this ETF have a strong Zacks Industry Rank. As a result, there is still some promise for investors who want to ride on this surging ETF.

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