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In this episode of ETF Spotlight, I speak with Sheraz Mian, Zacks Director of Research and a former oil analyst, about investing in the hot energy sector.
Crude prices are up more than 40% this year and 80% over the past year as the demand outlook continues to improve with economies around the world opening up. Oil demand could exceed pre-pandemic levels by the end of 2022, per International Energy Agency. Per WSJ, option traders are betting on return of $100 oil by the end of next year, a level not seen since 2014.
Investors are becoming more socially and environmentally conscious and pouring a lot of money into ESG ETFs. Fund giants like BlackRock and Vanguard continue to push companies on climate progress. Some of the major oil companies have started investing more in renewables. How will ESG investing trend impact oil and energy companies in the coming years?
Energy is the best performing sector this year up more than 48%. Sheraz’s favorite energy stocks are: Chevron (CVX - Free Report) , Pioneer Natural Resources (PXD - Free Report) , EOG resources (EOG - Free Report) , Schlumberger (SLB - Free Report) and Halliburton (HAL - Free Report) . Tune in to the podcast to learn more about them.
The most popular oil ETFs—the United States Oil Fund (USO - Free Report) , the ProShares Ultra Bloomberg Crude Oil (UCO - Free Report) and the Invesco DB Oil Fund (DBO - Free Report) --use different futures strategies to track oil prices. They are good at tracking the commodity in the shorter-term but could perform much worse than the commodity in the longer-term due to contango issues.
For long-term investors, it is better to consider ETFs that hold energy companies, rather than futures. The Energy Select Sector SPDR Fund (XLE - Free Report) and the Vanguard Energy ETF (VDE - Free Report) are market cap weighted ETFs. Exxon (XOM - Free Report) and Chevron account for about 40% of the portfolio.
The SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is an equal-weighted ETF. It tilts away from the oil giants and toward small- and mid-cap companies.
Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
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Can Energy Stocks & ETFs Continue Their Hot Streak?
In this episode of ETF Spotlight, I speak with Sheraz Mian, Zacks Director of Research and a former oil analyst, about investing in the hot energy sector.
Crude prices are up more than 40% this year and 80% over the past year as the demand outlook continues to improve with economies around the world opening up. Oil demand could exceed pre-pandemic levels by the end of 2022, per International Energy Agency. Per WSJ, option traders are betting on return of $100 oil by the end of next year, a level not seen since 2014.
Investors are becoming more socially and environmentally conscious and pouring a lot of money into ESG ETFs. Fund giants like BlackRock and Vanguard continue to push companies on climate progress. Some of the major oil companies have started investing more in renewables. How will ESG investing trend impact oil and energy companies in the coming years?
Energy is the best performing sector this year up more than 48%. Sheraz’s favorite energy stocks are: Chevron (CVX - Free Report) , Pioneer Natural Resources (PXD - Free Report) , EOG resources (EOG - Free Report) , Schlumberger (SLB - Free Report) and Halliburton (HAL - Free Report) . Tune in to the podcast to learn more about them.
The most popular oil ETFs—the United States Oil Fund (USO - Free Report) , the ProShares Ultra Bloomberg Crude Oil (UCO - Free Report) and the Invesco DB Oil Fund (DBO - Free Report) --use different futures strategies to track oil prices. They are good at tracking the commodity in the shorter-term but could perform much worse than the commodity in the longer-term due to contango issues.
For long-term investors, it is better to consider ETFs that hold energy companies, rather than futures. The Energy Select Sector SPDR Fund (XLE - Free Report) and the Vanguard Energy ETF (VDE - Free Report) are market cap weighted ETFs. Exxon (XOM - Free Report) and Chevron account for about 40% of the portfolio.
The SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is an equal-weighted ETF. It tilts away from the oil giants and toward small- and mid-cap companies.
Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>