Investors have been hearing plenty about the struggles of the Energy Select Sector SPDR (NYSEArca: XLE), the largest exchange traded fund dedicated to energy equities, and rival energy ETFs this year.
Put simply, many investors by now that energy, the seventh-largest sector weight in the S&P 500, is the worst-performing group in the U.S. this year.
XLE is down 12% year-to-date, by far the worst performance among the sector SPDR ETFs. That also makes XLE the only sector SPDR ETF that is in the red year-to-date. With the energy sector’s struggles have come ample speculation and conjecture regarding when the sector will rebound and if buying opportunities are near.
The challenge for energy equities is that some oil market observers see more declines coming for crude. Oil traders are concerned over how fast U.S. shale oil producers will increase production to capture the rising prices.
Investors considering ETFs such as XLE and rival ETFs such as the Fidelity MSCI Energy Index ETF (NYSEArca: FENY) and the Vanguard Energy ETF (NYSEArca: VDE) need to again monitor oil production data and credit issues at smaller energy producers.