Battered Energy ETFs Refueling?

January 11, 2019

Energy went on a wild ride in 2018, dragged along by a fluctuating oil price. Crude oil was actually at four-year highs for a time in 2018, but its price has since tanked from above $75 to $49.67, now on par with 2017 levels.

The price collapsed in the last quarter of the year due to a number of contributing factors, including the global economic slowdown, increased production from the U.S. and increased production from OPEC and Russia in response to Iranian sanctions.

 

 

There are quite a few sizable energy ETFs that cover the traditional energy space in the U.S., all of them down significantly for the year. Here we look at products with at least one year of trading history:

 

  NAV TR (Annualized, as of 1/4/2019)
Ticker Fund AUM ($M) Exp Ratio Inception 2018 3YR 5YR 10YR
XLE Energy Select Sector SPDR Fund 13,457.64 0.13% 16/12/1998 -18.21% 1.23% -5.73% 4.18%
VDE Vanguard Energy ETF 3,150.72 0.10% 23/9/2004 -19.96% 0.27% -6.97% 3.50%
IYE iShares U.S. Energy ETF 755.20 0.43% 12/6/2000 -19.35% -0.17% -6.91% 3.03%
FENY Fidelity MSCI Energy Index ETF 406.90 0.08% 24/10/2013 -19.98% -0.26% -7.18% -
FXN First Trust Energy AlphaDEX Fund 207.86 0.63% 8/5/2007 -24.77% -4.85% -13.34% 1.23%
RYE Invesco S&P 500 Equal Weight Energy ETF 169.47 0.40% 1/11/2006 -24.67% -0.96% -10.07% 4.20%
PXI Invesco DWA Energy Momentum ETF 50.78 0.60% 12/10/2006 -27.56% -4.74% -11.70% 5.61%
PSCE Invesco S&P SmallCap Energy ETF 25.00 0.29% 7/4/2010 -42.98% -17.10% -28.22% -
JHME John Hancock Multifactor Energy ETF 19.28 0.50% 28/3/2016 -21.41% - - -

 

Sector Overview

The largest and most dominant is the $14 billion Energy Select Sector SPDR Fund (XLE), which was among the first-ever U.S.-listed sector ETFs to launch (1998). It’s also among the cheapest, with an expense ratio of 0.13%.

The only two energy sector funds to charge less are the $449 million Fidelity MSCI Energy Index ETF (FENY) and the $3 billion Vanguard Energy ETF (VDE), which come with expense ratios of 0.08% and 0.10%, respectively.

The aforementioned funds represent the top three U.S. energy ETFs based on assets, as well as being the three cheapest funds in the asset class, suggesting that investors are paying attention to costs. In fact, FENY—the cheapest of the energy ETFs—is the only one of the top three funds and one of the very few energy ETFs overall to see positive inflows for 2018, gaining $21 million.

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