Perhaps surprisingly, the prior three months have painted a different portrait of the global investing landscape. Vanguard Total Stock Market (VTI) has straddled the flatline. PowerShares NASDAQ 100 (QQQ) has lost ground. In contrast, XLE and EEM are gaining heads of steam.
What may be most telling? The most visible members on the 52-Week New High List relate to the energy complex. You will not find Consumer Discretionary (XLY) or Health Care (XLV) there. Nor will you find broader market benchmarks covering the U.S., Europe or the Far East. Yet you will find assets tied to natural gas, energy infrastructure, oil equipment, “fracking” and energy production.
| Changing Of the Guard? Energy-Related ETFs Hitting New 52-Week Highs | ||||||
| Approx 3 Months | ||||||
| First Trust Natural Gas (FCG) | 15.8% | |||||
| SPDR Energy and Exploration (XOP) | 15.5% | |||||
| Market Vectors Unconventional Oil & Gas (FRAK) | 14.4% | |||||
| iShares DJ Oil Equipment & Services (IEZ) | 10.3% | |||||
| Vanguard Energy (VDE) | 8.4% | |||||
| Vanguard Total Stock Market (VTI) | 1.0% | |||||
In truth, if emerging market stocks falter yet again, U.S. energy stocks may not reassert themselves as much as one might hope. There is a relationship between U.S. energy company shares and foreign markets. That said, some have estimated a 40% P/E discount for emergers when comparing against the P/E “price tag” being paid to own broad U.S. exposure. “Global value” might act as a buffer against dramatic deterioration abroad. It may also give the energy sector a leg up in the months and years ahead.
