The Guggenheim S&P 500 Equal Weight Energy ETF (NYSEArca: RYE) is another idea to consider among energy ETFs as it was one of the group’s best-performing ETFs last year.
The outperformance in RYE may be explained in its alternative indexing methodology. As opposed to traditional beta-index ETFs, like XLE that reflects a cap-weighted index like the S&P 500 Energy Index, the Guggenheim Energy ETF equally weights its components so that smaller companies have a larger tilt in its underlying portfolio.
“The bull case for earnings hinges on a couple of factors. One, that the Organization of Petroleum Exporting Countries will honor its end of the bargain to cut production by 1.2 million barrels a day, keeping supply in-check. And two, that the Trump administration will be lenient with energy companies after the appointment of former Exxon Mobile Corp. Chief Executive Officer Rex Tillerson as secretary of state,” according to Bloomberg.
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