Investors dropped energy stocks like so many hot potatoes as crude-oil prices plummeted 55% from their highs in the summer of 2014. As a result, Standard & Poor’s Energy index sank 21% over the period, lagging the broad S&P 500-stock index by a remarkable 28 percentage points.
But if you’re a believer in Warren Buffett’s axiom that you should be greedy when others are fearful, you might view this as a good time to pick up some energy stocks. “When energy falls this quickly, it tends to stabilize and then continue its climb,” says Todd Rosenbluth, a senior director at S&P Capital IQ.
Rather than try to identify individual winners, your best bet may be to buy an energy-sector fund. A solid, low-cost choice is Vanguard Energy ETF(VDE). The exchange-traded fund tracks an index of companies that cover a broad swath of the industry, from oil-rig builders and drill-equipment makers to oil refiners and transportation companies. The fund’s 168 holdings are weighted by stock market value—the bigger a stock’s capitalization, the bigger its position in the fund—so behemoths ExxonMobil and Chevron account for more than one-third of the ETF’s assets. But shares of “big oil” tend to hold up better than the overall sector, in part because they operate across the many segments of the industry. As a result, the ETF has been 21% less volatile than its peers over the past three years.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
Return to Your Home Country to Retire: Repatriation RetirementThey came to the U.S. to live and work, but they want to retire in the old country. Here's how to juggle the move back home.
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
-
How to Choose a Mutual Fundmutual funds Investors wanting to build a portfolio will have no shortage of mutual funds at their disposal. And that's one of the biggest problems in choosing just one or two.
