Investors have bought into the notion of the energy sector as a contrarian/rebound play, funneling $2.11 billion into XLE this year. That is good for the largest inflows among all sector ETFs and one of the best inflow totals among all ETFs.
Still, investors will pay up to get involved with XLE components or the ETF itself, underscoring the fact the energy sector’s dislocated valuations are not a selling point for the group.
“Valuation has disconnected from earnings recently, and the forward P/E is now at a 15-year high of 28.8 and at a record-high 68% premium to the market’s P/E,” adds Yardeni Research.
Energy Select Sector SPDR
