ETF Trends
ETF Trends
  • Energy Equity ETFs act moderately better in early 2016 than last year
  • However, the energy sector is still unattractive in the eyes of some market observers
  • The energy patch remains downright pricey compared to the broader market

The Energy Select Sector SPDR (NYSEArca: XLE) and rival equity-based energy exchange traded funds are acting moderately better in the early stages of 2016 than they did last year, but that does not mean the energy sector is out of the woods.

Far from it. Amid contracting earnings, a spate of negative dividend actions and massive capital spending reductions, the energy sector is still unattractive in the eyes of some market observers.

Concerns over Chinese oil demand also pressured prices. China revealed that its service activity expanded at a slower-than-expected pace, which has fueled pessimism over a potential slowdown in the second largest oil-consuming country in the world. [China ETFs Suffer New Year Hangover ]

“The collapse of the oil market and the plunge in stock and bond prices across the energy sector might be a great opportunity for value investors, but (S&P Capital IQ analyst Stewart) Glickman is still cautious,” reports Andrew Osterland for CNBC.

Bright spots have been few and far between for equity-based energy exchange traded funds this year and for all the struggles the encountered by the sector, it still is not inexpensive relative to the S&P 500. In fact, the energy patch is downright pricey compared to the broader market. This after a spate of spending cuts that have not been met with widespread enthusiasm among investors. [Oil ETF Dividends Appear Safe…Sort Of]

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