In addition to commodities plays, investors should consider equity-based ETFs, such as the Energy Select Sector SPDR (NYSEArca: XLE) due to some anomalies with the energy’s sector weight in broader equity indexes. XLE, the largest energy sector ETF, is one of this year’s best-performing sector funds.
“During the first six months of this year, the energy sector’s weighting in the S&P 500 dipped below 7%. There has never been a time when the energy sector’s weight has dropped below 7% and the sector did not outperform the market over the subsequent three years. This is not going to be the first time it happens,” reports OilPrice.com.
SEE MORE: 4 Energy ETFs may be at Near-Term Tops
Integrated oil stocks have refining exposure, a segment that benefits when oil prices are low due to improved margins. That can help steady diversified energy ETFs like XLE because these are not dedicated exploration and production funds.
For more information on Energy ETFs, visit our Energy category.