A the green push towards more intensive use of renewable energy sources does not dampen prices for oil and gas, which argues in favor of gains in ETFs such as the Invesco Dynamic Energy Exploration and Production ETF (PXE).
According to Morningstar performance figures, the fund is up almost 100% for the year. This is a remarkable comeback given that in the previous year alone the fund lost almost 40% on oil prices hitting below $ 0 before recovering rapidly.
Since then, rising energy prices have started to hit the consumer market. As inflation kicks in, more and more consumers are feeling pain at the pumps and in other areas that require fossil fuel sources.
âAmericans are spending a dollar more on a gallon of gasoline than they were a year ago. ” a New York Times article Explain.
It’s not just in the United States where consumer prices are going up. Global demand for oil, natural gas, and coal is growing, while inflation does so too.
âThe energy system is suddenly in crisis around the world as the cost of oil, natural gas and coal has risen rapidly in recent months,â the article adds. “In China, Britain and elsewhere, fuel shortages and panic buying have resulted in blackouts and long lines at gas stations.”
A dynamic hedge against oil and gas inflation
PXE offers the ideal hedge against inflation, especially if investors want to protect their sources of fixed income. Rising interest rates could dampen bond gains as the Federal Reserve seeks to cut back on economic stimulus.
PXE seeks to track the investment results of the Dynamic Energy Exploration & Production IntellidexSM Index. The fund invests at least 90% of its total assets in the securities that make up the underlying index.
The index is made up of common stocks of US companies involved in the exploration and production of natural resources used to generate energy. These companies are primarily engaged in the exploration, extraction and production of crude oil and natural gas from onshore or offshore wells.
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