Billions of people around the globe depend on companies that produce and distribute energy. From the lights in your home to the fuel in your car, you need energy to get things done. Energy's sheer demand makes it a smart choice for traders to grow wealth. Energy exchange-traded funds (ETFs), specifically energy ETFs, are a good place to start investing in the energy sector.
There are essentially 2 major categories of energy ETFs you can invest in. You can put your money behind nonrenewable or renewable energy ETFs.
Renewable energy ETFs contain assets such as stocks and equities of different companies that produce or distribute natural gas, oil, nuclear energy and coal. Nonrenewable energy ETFs contain assets of multiple companies that produce and distribute energy from sources such as solar, wind, water or recycled waste.
Energy ETFs are highly volatile. But they are ideal if you want to expand their financial portfolio to multinational corporations.
Quick Look at the Best Energy ETFs:
- Quick Look at the Best Energy ETFs:
- Energy ETFs Biggest Gainers and Losers
- Premarket Energy ETFs
- Aftermarket Energy ETFs
- Why Invest in Energy ETFs?
- 3 Energy ETF(s) by AUM
- Best Online Brokers for Energy ETFs
- Invest in a Better Future
- Frequently Asked Questions
Energy ETFs Biggest Gainers and Losers
Here’s a quick look at energy ETFs on the market with the best profits and worst losses.
|NLR||VanEck Uranium Nuclear Energy ETF||$73.94||1.84%||50K||Buy/Sell|
|ERX||Direxion Energy Bull 2X Shares||$57.51||1.57%||518.2K||Buy/Sell|
|ENFR||Alerian Energy Infrastructure ETF||$23.20||1.39%||20.3K||Buy/Sell|
|MLPX||Global X MLP & Energy Infrastructure ETF||$44.94||1.28%||71.7K||Buy/Sell|
|PXI||Invesco Dorsey Wright Energy Momentum ETF||$43.43||1.15%||30.1K||Buy/Sell|
|EINC||VanEck Energy Income ETF||$68.72||1.12%||2.6K||Buy/Sell|
|USAI||Pacer American Energy Independence ETF||$29.02||1.07%||2.2K||Buy/Sell|
|PSCE||Invesco S&P SmallCap Energy ETF||$52.16||0.98%||52.6K||Buy/Sell|
|FXN||First Trust Energy AlphaDEX Fund||$16.89||0.86%||1.9M||Buy/Sell|
|EMLP||First Trust North American Energy Infrastructure Fund||$27.60||0.84%||273.5K||Buy/Sell|
|DBE||Invesco DB Energy Fund||$21.18||-2.62%||69.2K||Buy/Sell|
|ERY||Direxion Daily Energy Bear 2X Shares||$28.00||-1.48%||418.1K||Buy/Sell|
|PBW||Invesco WilderHill Clean Energy ETF||$26.51||-0.57%||261.4K||Buy/Sell|
|QCLN||First Trust NASDAQ Clean Edge Green Energy Index Fund||$36.57||-0.52%||203.2K||Buy/Sell|
|CHIE||Global X MSCI China Energy ETF||$15.91||-0.32%||3.9K||Buy/Sell|
|SMOG||VanEck Low Carbon Energy ETF||$103.73||-0.15%||3.8K||Buy/Sell|
Premarket Energy ETFs
Take a look at the premarket positions of energy ETFs to help you predict price movements during trading sessions.
Aftermarket Energy ETFs
Here are the positions of energy ETFs after major stock exchanges are closed for trading.
Why Invest in Energy ETFs?
Energy ETFs are highly volatile, but that doesn't mean the risk isn't worth the reward. Energy ETFs are growing in demand, add diversification to your investments and energy companies wield major influence in the global marketplace.
1. Growing Demand
Power generators and distributors are a part of the core industries of our society. Although recently the demand for natural gas and oil has rapidly declined over the years, it's still a vested interest for investors. Some of the biggest companies in the U.S. are from the nonrenewable energy sector with billion-dollar capitalizations.
The turn of the millennium has paved the way for newer generations to be conscious of the environment. This bold shift toward clean energy has resulted in an explosion of eco-friendly firms all over the world. And the rise in internationally observed events such as Earth Day, World Ocean Day, Global Wind Day and Ecological Debt Day has heavily impacted the growth of clean energy enterprises.
Buying a large volume of stocks in a single major natural gas and oil company such as Royal Dutch Shell (RSD-A) or BP (BP) might be out of your financial reach. Energy ETFs can afford you the opportunity to invest in MNCs with marginal stakes in multiple industry leaders.
Keep in mind the energy sector is a highly volatile market. A harsh summer can dry up rivers and oceans, lowering the units of power produced in a hydropower plant. A longer winter can have a direct effect on solar energy harnessed in power plants.
And political escalations in the Middle East can severely affect the price of oil. Diversified portfolios can guard your investments and significantly reduce the risk of incurring losses.
3. Global Influencer
Companies that generate and dispense energy have a huge role to play in empowering global economies. Economic powerhouses pump out energy. China produce 7,111.8 TWh, and the U.S. produces 4,460.8 TWh of the total world electricity. A small stake in energy producers from any of these countries makes you a global influencer and adds tremendous value to your financial portfolio.
3 Energy ETF(s) by AUM
Diversified energy ETFs offer a mix of small-, mid- and large-cap companies to balance the disruptive demand and supply cycles expected of the industry.
Measure and compare expense ratios, historical performance, liquidity and the total assets under management (AUM) before you choose an ETF. Get started with a few of our top picks.
1. SPDR Energy Select Sector Fund (XLE)
SPDR Energy Select Sector Fund has been on the market since December 1998. It tracks the Energy Select Sector Index and offers exposure to the U.S. energy industry, including many of the world’s largest oil producers. Its opening rate is $29.06 as of March 31, 2020 with a change rate of 1.54%. It has a low expense ratio of 0.13% with a total AUM of $6,468 million. It has high liquidity with an average daily trade volume of 34,330,500 shares.
2. Vanguard Energy ETF (VDE)
Vanguard Energy ETF has been on the market since September 2004. It tracks the MSCI U.S. Investable Market Energy 25-50 Index and offers broad-based exposure to the U.S. energy industry. It has an opening rate of $38.22 as of March 31, 2020 with a change rate of 1.65%. It has a low expense ratio of 0.10% and a total AUM of $1,989 million. It has high liquidity with an average daily trade volume of 2,269,300 shares.
3. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
Get Real Time Here
|Vol / Avg.271.343K / 203.153K||Mkt Cap-|
|Day Range36.250 - 37.000||52 Wk Range32.370 - 59.430|
QCLN utilizes the NASDAQ Clean Edge Green Energy Index as a benchmark. The multi-cap, blended ETF offers you exposure to a variety of green energy like solar, biofuels, advanced batteries and photovoltaics.
Its top 3 holdings include:
It has an expense ratio of 0.60% and a total AUM of $361 million.
Best Online Brokers for Energy ETFs
An online broker can help you find the best ETFs in the energy sector for investing. Most online brokers allow you to trade ETFs commission-free. Benzinga recommends the following online brokers to get you started.
More than 99,000 people around the world use TradeStation as their preferred online broker. You can open a TS GO account with a $0 minimum deposit or open a TS Select account with a $2,000 minimum deposit. TradeStation provides more than 2,000 ETFs to invest in.
You can invest in energy ETFs commission-free on the platform. You can also trade ETFs with the ability to track indices, sectors, commodities and currencies.
TradeStation is regulated by the Securities and Exchange Commision (SEC) and Financial Industry Regulatory Authority (FINRA).
Established in 1985, Firstrade has been a leading online broker for more than 3 decades. You can open an account on Firstrade with a $0 minimum deposit. It has an average trade execution speed of 0.1 seconds.
Firstrade offers more than 2,200 ETFs to invest in at a $0 commission fee. It's regulated by the SEC and FINRA.
Magnifi is a marketplace that allows you, as an investor, to use common brokerage tools and AI to make the best decisions for your portfolio. Because you can pull up all the information you need on a given asset, you can easily invest in the assets that will give you the results you deserve and better match your strategy.
Search for the investment options that meet your needs, invest in specific categories or scan for assets in a price range that’s affordable for you.
Best for long-term investors and those who require a bit of client support, you can also learn more about investing from this platform, utilize the AI-powered investing assistant, enjoy commission-free investing, try the mobile app and take advantage of over 15,000 possible investment options. This makes Magnifi a good place to trade for both seasoned and novice traders.
4. TD Ameritrade
With a client base of 11 million and a total of over $1 trillion in assets, TD Ameritrade is a trusted online broker. You can open an account on TD Ameritrade with a $0 minimum deposit.
All ETFs on the platform are traded at $0 commission rates except for broker-assisted trades that will cost you $25 per trade.
You can take advantage of powerful trading tools such as comprehensive charting and customizable algorithms to help you elevate your trading experience. TD Ameritrade is regulated by FINRA.
Invest in a Better Future
There’s a limited reserve of natural gas and oil under the earth’s surface. Investing in companies that produce cleaner energy is the need of the hour.
You can do your part by investing in energy ETFs that are eco-friendly and leave a smaller carbon footprint on the planet. Get started with a few of our top picks today.
Frequently Asked Questions
What types of energy ETFs can I invest in?
You can invest in renewable or non-renewable energy ETFs.
Where can I find brokers who trade in energy ETFs?
You can find a list of Benzinga’s brokers that trade in energy ETFs on the list above.
Are energy ETFs safe?
Energy ETFs can be volitile, so it’s important to do your research before investing in them.