Consumers are well aware of rising energy costs reflected in gas prices and utility bills. Investors can counter these rising costs with plays on the energy sector using Invesco energy-focused exchange traded funds (ETFs).
First up is a broad play that encompasses mainly oil and natural gas. The Invesco DB Energy Fund (DBE) seeks to track the DBIQ Optimum Yield Energy Index Excess Return, which is intended to reflect the changes in market value of the energy sector.
The index commodities consist of light, sweet crude oil (WTI), heating oil, Brent crude oil, RBOB gasoline, and natural gas. The fund invests in futures contracts in an attempt to track its index.
Rising commodity prices like oil and natural gas give investors an added component to hedge against inflation. That can be had with funds like DBE.
“This ETF provides exposure to some of the most popular commodities futures in the world. This includes light sweet crude, heating oil, Brent crude oil, RBOB gasoline, and Natural gas,” an ETF Database analysis suggests. “Commodity exposure in a portfolio used to be a binary choice, either one invested in them, or they did not. Now, commodities have been proven as powerful inflation hedging tools with the power to generate powerful returns for an individual portfolio.”
An Oil-Focused ETF
Oil prices have been pushing higher despite a global move towards renewable energy. Feeding into higher oil prices is also geopolitical factors such as the crisis at the Ukrainian border.
The Invesco DB Oil Fund (DBO) provides an ideal opportunity to get exposure to the current upside in oil prices. Furthermore, investors do not hold direct exposure to the heavy price volatility of holding positions directly in the commodity itself.
Per the fund description, DBO seeks to track the DBIQ Optimum Yield Crude Oil Index Excess Return (DBIQ-OY CL ER), which is intended to reflect the changes in market value of crude oil. The single index commodity consists of light, sweet crude oil (WTI), and the fund invests in futures contracts in an attempt to track its corresponding index.
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