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Tap the Best-Performing Sector YTD With These ETFs
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The year 2022 has been tough for Wall Street so far, as it is marked a slew of macroeconomic factors plaguing the investment environment. The red-hot inflation levels and the aggressive Federal Reserve to tame the same weighed on investors’ sentiments last week as well.
The major broad market indices once again ended another week in the red. The Dow Jones Industrial Average was down 2.9% in the week ending May 20. The blue-chip index saw its first eight-week losing streak since 1923 (per a CNBC article). The other two broad-market indices, the S&P 500 and the Nasdaq composite also lost 3% and 3.8% in the previous week, witnessing their seven-week lean patch.
However, amid the market meltdown, the energy sector remained strong and rose 1.1% last week. In fact, eight of 11 sectors ended the previous week in the red. The energy sector has been clearly the best-performing area so far this year as well. The S&P 500 Energy sector has been up 46.4% so far against the broader index’s 18.1% decline.
The energy space has been a vital investment area, holding the interest of market participants since the start of the year. Reopening global economies, ramping up the coronavirus vaccine rollout and bettering labor markets further boosted the sector. The spike in oil prices due to the Russia-Ukraine crisis increased the sector’s momentum.
Russia stands as the world’s second-largest oil producer. European refineries procure most of their crude oil supplies from Russia. Notably, Russia also provides about two-fifths of its natural gas supply to Europe. In fact, the country emerged as the largest natural gas and oil supplier to the European Union in 2021.
According to SPI Asset Management managing partner Stephen Innes, "Oil prices are supported as gasoline markets remain tight amid solid demand heading into the peak U.S. driving season. Refineries are typically in ramp-up mode to feed U.S. drivers' unquenching thirst at the pump," as mentioned in a Reuters article.
In fact, Warren Buffett is also deepening his focus on the energy sector. Buffett has increased his investment in Chevron (CVX - Free Report) by 475.6% since the end of 2021. Chevron was worth $25.9 billion at the end of the first quarter of 2022 compared with $4.5 billion at 2021 end (per a CNBC article). Chevron pays a 3.6% dividend.
Buffett also scooped up 14% of the oil giant Occidental Petroleum (OXY - Free Report) , worth more than $7 billion, in two weeks during March this year. Per a regulatory filing quoted in Wall Street Journal, Warren Buffett bought 901,768 shares of Occidental Petroleumin May, making the latter one of his 10 biggest holdings.
Energy ETFs to Track
Against the bullish energy sector backdrop, let’s look at some energy ETFs that are worth adding to your portfolio for boosting returns:
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) — up 52.8% year to date
PXE seeks to track the performance of the Dynamic Energy Exploration & Production Intellidex Index. With an AUM of $282.1 million, PXE has an expense ratio of 63 basis points (bps) (read: ETF Areas in the Spotlight Post Buffett's 2022 Meeting).
The Energy Select Sector SPDR Fund (XLE - Free Report) — up 51.1%
XLE seeks to provide investment results, before expenses, that generally correspond to the price and yield performance of the Energy Select Sector Index. With an AUM of $39.26 billion, XLE has an expense ratio of 0.10% (read: 4 Top-Ranked Sectors & Its ETFs to Play Amid Market Slump).
VDE seeks to track the performance of the MSCI US Investable Market Energy 25/50 Index. With an AUM of $8.28 billion, VDE charges 10 bps as fees.
Fidelity MSCI Energy Index ETF (FENY - Free Report) — up 49.1%
FENY seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Energy Index. FENY has an AUM of $1.59 billion and charges a fee of 0.08% (read: Exxon, Chevron Lags Q1 Earnings, Up YoY: Energy ETFs in Focus).
IYE seeks investment results that generally correspond to the price and yield performance of the Russell 1000 Energy RIC 22.5/45 Capped Gross Index. IYE has an AUM of $3.13 billion and charges a fee of 0.41%.
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Tap the Best-Performing Sector YTD With These ETFs
The year 2022 has been tough for Wall Street so far, as it is marked a slew of macroeconomic factors plaguing the investment environment. The red-hot inflation levels and the aggressive Federal Reserve to tame the same weighed on investors’ sentiments last week as well.
The major broad market indices once again ended another week in the red. The Dow Jones Industrial Average was down 2.9% in the week ending May 20. The blue-chip index saw its first eight-week losing streak since 1923 (per a CNBC article). The other two broad-market indices, the S&P 500 and the Nasdaq composite also lost 3% and 3.8% in the previous week, witnessing their seven-week lean patch.
However, amid the market meltdown, the energy sector remained strong and rose 1.1% last week. In fact, eight of 11 sectors ended the previous week in the red. The energy sector has been clearly the best-performing area so far this year as well. The S&P 500 Energy sector has been up 46.4% so far against the broader index’s 18.1% decline.
The energy space has been a vital investment area, holding the interest of market participants since the start of the year. Reopening global economies, ramping up the coronavirus vaccine rollout and bettering labor markets further boosted the sector. The spike in oil prices due to the Russia-Ukraine crisis increased the sector’s momentum.
Russia stands as the world’s second-largest oil producer. European refineries procure most of their crude oil supplies from Russia. Notably, Russia also provides about two-fifths of its natural gas supply to Europe. In fact, the country emerged as the largest natural gas and oil supplier to the European Union in 2021.
According to SPI Asset Management managing partner Stephen Innes, "Oil prices are supported as gasoline markets remain tight amid solid demand heading into the peak U.S. driving season. Refineries are typically in ramp-up mode to feed U.S. drivers' unquenching thirst at the pump," as mentioned in a Reuters article.
In fact, Warren Buffett is also deepening his focus on the energy sector. Buffett has increased his investment in Chevron (CVX - Free Report) by 475.6% since the end of 2021. Chevron was worth $25.9 billion at the end of the first quarter of 2022 compared with $4.5 billion at 2021 end (per a CNBC article). Chevron pays a 3.6% dividend.
Buffett also scooped up 14% of the oil giant Occidental Petroleum (OXY - Free Report) , worth more than $7 billion, in two weeks during March this year. Per a regulatory filing quoted in Wall Street Journal, Warren Buffett bought 901,768 shares of Occidental Petroleumin May, making the latter one of his 10 biggest holdings.
Energy ETFs to Track
Against the bullish energy sector backdrop, let’s look at some energy ETFs that are worth adding to your portfolio for boosting returns:
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) — up 52.8% year to date
PXE seeks to track the performance of the Dynamic Energy Exploration & Production Intellidex Index. With an AUM of $282.1 million, PXE has an expense ratio of 63 basis points (bps) (read: ETF Areas in the Spotlight Post Buffett's 2022 Meeting).
The Energy Select Sector SPDR Fund (XLE - Free Report) — up 51.1%
XLE seeks to provide investment results, before expenses, that generally correspond to the price and yield performance of the Energy Select Sector Index. With an AUM of $39.26 billion, XLE has an expense ratio of 0.10% (read: 4 Top-Ranked Sectors & Its ETFs to Play Amid Market Slump).
Vanguard Energy ETF (VDE - Free Report) — up 49.3%
VDE seeks to track the performance of the MSCI US Investable Market Energy 25/50 Index. With an AUM of $8.28 billion, VDE charges 10 bps as fees.
Fidelity MSCI Energy Index ETF (FENY - Free Report) — up 49.1%
FENY seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Energy Index. FENY has an AUM of $1.59 billion and charges a fee of 0.08% (read: Exxon, Chevron Lags Q1 Earnings, Up YoY: Energy ETFs in Focus).
iShares U.S. Energy ETF (IYE - Free Report) — up 46.2%
IYE seeks investment results that generally correspond to the price and yield performance of the Russell 1000 Energy RIC 22.5/45 Capped Gross Index. IYE has an AUM of $3.13 billion and charges a fee of 0.41%.