ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Leveraged & Inverse ETF Channel
  2. This Leveraged Energy Play Looks Unstoppable
Leveraged & Inverse ETF Channel
Share

This Leveraged Energy Play Looks Unstoppable

Ben HernandezMay 10, 2022
2022-05-10

The energy sector has been flourishing while most of the stock market has been languishing amid inflationary pressures, causing the Direxion Daily Energy Bull 3X Shares (ERX A-) to rise over 100% this year.

ERX seeks daily investment results equal to 200% 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, consumable fuels, and energy equipment and services.

“Oil and natural gas are hot, and so are American energy stocks,” a Wall Street Journal article said. “But investors, whether they have been along for the ride or are just thinking of joining now, may be wary of getting burned.”

“January through March of this year was the best quarter for the sector since 1970, according to BofA Global Research,” the article added. “While the S&P 500 is down roughly 13% year to date, the energy sector is up 49%. That follows a year when energy stocks beat the broader index by 21 percentage points.”

Direxion Daily Energy Bull 2x ETF

This Time May Be Different

With energy being a cyclical sector, it’s prudent for investors to wonder whether they might be getting on the bandwagon too late. However, with inflationary pressures looking more persistent than transitory, it could be more strength ahead for the sector.

“Investors who are tempted by energy’s returns might be wondering if the rally has already run its course,” the WSJ article noted. “Energy is a cyclical sector, after all: Exhilarating peaks tend to be followed by equally harrowing troughs. Periods of high prices either lead to more drilling or damped demand until eventually, the commodity’s price falls.”

The article noted that the Energy Information Administration (EIA) forecasts a ramp-up of crude oil production in 2022 and subsequently 2023. Additionally, the Russia-Ukraine conflict is adding a geopolitical component that can continue to push oil prices higher.

“But this time may be different,” the article noted further. “It is notable how disciplined U.S. oil-and-gas companies plan to be with their drilling—and not just as atonement for past excesses. While equipment and labor shortages have been a feature of almost every energy cycle, Dan Pickering, founder and chief investment officer of Pickering Energy Partners, notes that he has never seen today’s level of scarcity.”

For more news, information, and strategy, visit the Leveraged & Inverse Channel.


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X