The Invesco Dynamic Energy Exploration & Production ETF (PXE) has seen stellar returns while the rest of the market falters.
U.S. equities began August on a strong foot, rebounding losses from the first half of the year, but reversed course to end the month in negative territory after a hawkish Fed and recession fears weighed on investors, according to S&P Dow Jones Indices commentary.
The S&P 500 posted a loss of 4%, while the S&P MidCap 400 and S&P SmallCap 600® performed similarly with 3% and 4% declines. Energy and utilities were the only sectors that didn’t post losses during the month.
PXE, however, is leading in one-month, year-to-date, and one-year returns across Invesco’s vast lineup of ETFs. The fund has returned 6.79% over a one-month period, 63.27% year to date, and 98.34% over a one-year period, as of the end of August, according to VettaFi.
PXE offers exposure to the exploration and production sub-sector of the domestic energy market, making it a potentially useful tool for those looking to target stocks of companies responsible for discovering and accessing new deposits of oil and gas, according to VettaFi.
PXE can be useful as a tactical overlay or as part of a sector rotation strategy. PXE is part of the suite of Intellidex products from PowerShares, meaning that this ETF is linked to an index designed to outperform traditional cap-weighted benchmarks.
The index thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value, according to Invesco.
The index is composed of securities of 30 U.S. companies involved in the exploration and production of natural resources used to produce energy. These companies are engaged principally in the exploration, extraction, and production of crude oil and natural gas from land-based or offshore wells. These companies include petroleum refineries that process the crude oil into finished products, such as gasoline and automotive lubricants and companies involved in gathering and processing natural gas and manufacturing natural gas liquid.
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