This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Can Energy Stocks Stay Hot in 2022?
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Can Energy Stocks Stay Hot in 2022?
Markets

Can Energy Stocks Stay Hot in 2022?

Editorial Board Published January 8, 2022
Share
Can Energy Stocks Stay Hot in 2022?
SHARE

By most measures, 2021 was a good year to be an energy investor. According to research firm Morningstar Inc., energy outperformed every other funds sector, and asset flows into these funds grew a net $11.4 billion. As economies around the world started to reopen, energy demand surged, fueling a rebound by energy stocks.

Contents
SHARE YOUR THOUGHTSPassive index fundsA propane storage tank in Springville, Utah, on Oct. 20, 2021.Thematic fundsWhere are gasoline prices going? Traffic in Annapolis, Md., on Nov. 23, 2021.Complex funds

Those same stocks could be poised to perform well this year, as energy demand remains elevated. Limited oil and gas supply is also likely to keep prices high. A recent research note from UBS suggested that oil could stay above $80 a barrel in 2022; it’s around $80 now.

SHARE YOUR THOUGHTS

What do you think about energy-sector investing? Join the conversation below.

Energy investors can use exchange-traded funds to invest in a diversified portfolio of fossil-fuel producers and other companies, or they can choose funds that focus on particular sectors of the industry. Riskier positions are available in leveraged funds, which aim for double or more the returns of their benchmark indexes, and inverse funds, which seek to provide similar outperformance in the opposite direction of their benchmarks.

Here are some examples, including some of last year’s top performers.

Passive index funds

As with every sector of the economy, low-cost passive index ETFs are available for energy. Vanguard Energy ETF (VDE) has an expense ratio of 0.10% and tracks the MSCI US IMI Energy 25/50 Index. The result is a broad basket of investments in oil-and-gas companies, coal companies and the infrastructure that supports them, including pipeline services, transportation and storage. VDE ended 2021 up 56.2%.

State Street Global Advisors’ Energy Select Sector SPDR ETF (XLE), which tracks the Energy Select Sector Index—a broad benchmark that includes fossil-fuel producers and companies that provide services for the oil and natural-gas industries—ended last year up 53.3%. The fund has an expense ratio of 0.12%.

A propane storage tank in Springville, Utah, on Oct. 20, 2021.

Photo: George Frey/Bloomberg News

Thematic funds

For investors who want a more narrowly focused exposure to the energy sector, there are several thematic funds that invest in specific areas of the industry. These funds tend to have a higher expense ratio than the large passive funds.

First Trust Natural Gas ETF (FCG) tracks the ISE-Revere Natural Gas Index, which includes natural-gas exploration and production companies. FCG has an expense ratio of 0.60% and invests in large-, medium- and small-cap companies. Natural gas is often thought of as a bridge fuel during times when the supply of other fuel sources is tight and when economies begin their energy transition to renewables. Both trends were big last year, and FCG ended 2021 up 98.4%.

Invesco Dynamic Energy Exploration & Production ETF (PXE) focuses on exploration and production for both oil and gas. It has an expense ratio of 0.63%. As energy demand rebounded in 2021, PXE ended the year up 103%.

Getting fuel out of the ground isn’t the only theme available to energy investors. VanEck Oil Services ETF (OIH) provides exposure to the 25 largest and most heavily traded oil-services companies in the U.S. These are the companies that provide the machinery for processing fuel, the companies that provide maintenance for drilling and processing equipment and the companies that do the processing. Oil services tends to be a more conservative theme within energy, because these companies’ share prices are less volatile than those of fuel producers. Fund pricing and performance reflects the lower volatility: OIH has an expense ratio of 0.35% and ended 2021 up 21.3%.

Where are gasoline prices going? Traffic in Annapolis, Md., on Nov. 23, 2021.

Photo: Jim Watson/Agence France-Presse/Getty Images

Complex funds

There are also several funds that provide more-complex exposure to the energy sector. Leveraged and inverse ETFs have grown in popularity with investors in recent years. However, these funds tend to be the most expensive, and while they can post huge gains due to leverage, that sword cuts both ways, and they can post outsize declines as well. Working with an adviser can help investors make the best use of these ETFs.

Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares (GUSH) is meant to be held as a short-term fund. The strategy aims to give two times the return of the S&P Oil and Gas Exploration and Production Select Industry index, but if the index goes down investors also face two times the losses. The fund is one of the most expensive energy ETFs, with an expense ratio of 1.17%. It ended 2021 up 130%.

MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU) tracks the Solactive MicroSectors US Big Oil Index of oil producers and aims to provide three times the daily return of the index. The fund is higher risk than most funds in the energy ETF category and is meant to be a short-term investment. It has an expense ratio of 0.95% and ended 2021 up 165%.

Ms. McCann is a writer in New York. She can be reached at [email protected].

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Ethiopia Releases Opposition Figures as It Seeks End to War Ethiopia Releases Opposition Figures as It Seeks End to War
Next Article Iran Navy Port Emerges as Key to Alleged Weapons Smuggling to Yemen, U.N. Report Says Iran Navy Port Emerges as Key to Alleged Weapons Smuggling to Yemen, U.N. Report Says

Editor's Pick

Brooke Hogan Written Out of Hulk’s Will (At Her Personal Request)

Brooke Hogan Written Out of Hulk’s Will (At Her Personal Request)

Studying Time: 3 minutes Brooke Hogan isn’t in her dad’s will, a brand new report reveals. Regardless of years of…

By Editorial Board 4 Min Read
6 Greatest Underwear To Stop Chafing For Males in 2025 | Fashion
6 Greatest Underwear To Stop Chafing For Males in 2025 | Fashion

We independently consider all really helpful services. Any services or products put…

15 Min Read
9 Finest Males’s Shorts Manufacturers – Versatile Types For 2025 | Fashion
9 Finest Males’s Shorts Manufacturers – Versatile Types For 2025 | Fashion

We independently consider all advisable services. Any services or products put ahead…

13 Min Read

Oponion

8 Greatest Denims For Tall Males – Skinny and Relaxed Matches For 2024 | Fashion

8 Greatest Denims For Tall Males – Skinny and Relaxed Matches For 2024 | Fashion

We independently consider all really helpful services. Any services or…

December 19, 2024

LGBTQ movement is losing trans-athlete debate: Transgender Law Center

UPenn swimmer Lia Thomas may be…

January 5, 2022

Thursday’s CCS basketball semifinals: High storylines, surprises, tendencies, extra

LATE RUN SENDS PALO ALTO BOYS…

February 28, 2025

Rating Males’s Celeb Fragrances | Fashion | Fashion

We independently consider all really helpful…

October 24, 2024

Coming Soon for Homeowners: Solar Panels That Actually Look Attractive

Journal Reports: EnergyElectric Vehicles Require Lots…

November 13, 2022

You Might Also Like

Microsoft joins unique T market cap membership after AI surge, becoming a member of just one different firm
Markets

Microsoft joins unique $4T market cap membership after AI surge, becoming a member of just one different firm

Angelo Zino, a CFRA Analysis senior fairness analyst, discusses the efficiency of Microsoft, Meta and the general tech sector within…

4 Min Read
Moderna plans to slash 10% of workforce as COVID shot gross sales gradual
Markets

Moderna plans to slash 10% of workforce as COVID shot gross sales gradual

Rep. Russell Fry, R-S.C., discusses the Home probe into Pfizer’s launch of COVID vaccine outcomes and extra on ‘Varney &…

3 Min Read
Figma goes public, and the CEO was a fellow at Peter Thiel’s basis
Markets

Figma goes public, and the CEO was a fellow at Peter Thiel’s basis

‘Making Money’ host Charles Payne discusses whether or not the inventory market is a coiled spring able to explode or…

5 Min Read
Zuckerberg needs to offer everybody their very own private superintelligence via Meta’s new imaginative and prescient
Markets

Zuckerberg needs to offer everybody their very own private superintelligence via Meta’s new imaginative and prescient

Meta CEO Mark Zuckerberg on Wednesday introduced the tech large will give attention to growing a private superintelligence for everybody, which…

4 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?