A lot of sectors would like to put 2020 behind them and the energy sector was one of them. It was quite a roller coaster ride, especially with oil reaching negative territory back in April, but brighter days could be ahead for energy. Time to buy?
“The energy sector has seen plenty of ups and downs in 2020,” a U.S. News article said. “For all the talk of volatility in oil markets or the challenges posed by the transition to renewable energy sources, the bottom line is that energy is crucial to the proper functioning of the global economy – so one way or another, energy stocks have an important role to play in your portfolio. The good news for interested investors is that energy exchange-traded funds allow many different ways to play the sector, whether you’re interested in Big Oil stocks or clean energy plays that are part of the solution to climate change. Whatever your strategy, there’s likely a fund for you.”
For broad market exposure to energy with an ETF wrapper, investors can look at the Energy Select Sector SPDR Fund (XLE). XLE seeks to provide investment results that correspond generally to the price and yield performance of publicly traded equity securities of companies in the Energy Select Sector Index, which includes securities of companies from the following industries: oil, gas and consumable fuels; and energy equipment and services.
A Leveraged, Broad Market Play
For a leveraged broad market play on energy, traders can consider funds like the Direxion Daily Energy Bull 3X Shares (NYSEArca: ERX) for bullish plays and the Direxion Daily Energy Bear 3X Shares (ERY) for bearish opportunities. ERX rose 2.19% at the close of Monday’s session.
Fund features:
- ERX seeks daily investment results equal to 300% of the daily performance of the Energy Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the energy sector which includes the following industries: oil, gas and consumable fuels; and energy equipment and services.
- On the other end of the spectrum, ERY seeks daily investment results that equate to 300% of the inverse of the daily performance of the Energy Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the energy sector which includes the following industries: oil, gas and consumable fuels; and energy equipment and services.
For more market trends, visit ETF Trends.
