The Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy exchange traded fund, gained almost 2% last week but finished the first quarter with a loss of more than 6%, highlighting the energy sector’s status as the worst first quarter laggard.
With the energy sector’s first-quarter lethargy, there have been plenty of market observers voicing the opinion that the sector is poised to rebound. Some analysts believe the energy sector’s growth prospects remain attractive following the dip to start 2017.
Some analysts believe the energy sector can deliver upside for investors later this year. Energy is one of a small amount of sectors that still trades at a noticeable discount relative to long-term averages. Additionally, the energy sector is usually among one of the largest sector weights in value ETFs, underscoring the point that the group is attractively valued relative to some defensive sectors, which trade at lofty multiples.
However, some traders are not convinced and caution about betting on an energy sector rebound.