Energy Is Only Sector to Deliver Positive Returns in First Half | ETF Trends

U.S. equities posted their worst first half performance since 1970, as inflation concerns, Fed rate hikes, and slowing economic growth weighed on markets, according to S&P Dow Jones Indices.

The S&P 500 posted a loss of 20% and nearly all sectors posted losses, with energy the only one to post a gain YTD. The S&P 500 Equal Weight Energy Plus Index has posted a total return of 30.9% year to date as of June 30.

The S&P 500 Equal Weight Energy Plus Index, which is tracked by the Invesco S&P 500 Equal Weight Energy ETF (RYE), equally weights stocks in the energy sector of the S&P 500 Index. The energy sector includes companies engaged in the exploration and production, refining and marketing, and storage and transportation of oil, gas, coal, and consumable fuels, as well as companies that offer oil and gas equipment and services, according to Invesco.

RYE offers a unique way to access the U.S. energy market, giving investors seeking to avoid cap-weighted products an alternative way to bet on oil stocks. The fund’s equal weighting methodology may be particularly appealing in the top-heavy energy industry, where traditional cap-weighting can result in significant concentration issues.

The fund has 24 holdings, each equally weighted around 4%, and tilts toward highly liquid stocks, demonstrated by holding companies with relatively higher trading volumes.

RYE charges 40 basis points. While this ETF may be more expensive than some competitors from a cost perspective, it offers an opportunity to achieve more balanced exposure to the energy sector that avoids the potential performance drags of cap-weighted ETFs.

Incepted in 2006, the fund has $519 million in assets under management.

For more news, information, and strategy, visit our Portfolio Strategies Channel.