Higher oil prices driven by geopolitical news, renewed mergers and acquisitions rumors and the sector’s status as a value destination are among the fundamental factors that are driving energy ETFs higher.
Of the top-30 non-leveraged ETFs over the past six months, seven are energy funds, a group led by the Global X MLP & Energy Infrastructure ETF (NYSEArca: MLPX). A cooperative interest rate environment has combined with investors’ desire for energy exposure and thirst for yield to keep master limited partnerships a favored asset class.
Less than a month ago, Global X noted MLPX, which is just 11 months old, reached $100 million in assets under management. That number has since surged to $152 million. [Global X Income ETFs See Surge in Assets]
Even with the energy rally, the sector remains attractively valued. The sector trades at 15.6 times earnings compared to 17 times for the S&P 500, but energy stocks are expected to post earnings growth of 14.6% compared to 11.1% for the benchmark U.S. index, according to Bloomberg.
Energy Select Sector SPDR
