VDE: 2 Years Later, I'm Still Buying The Energy Sector

Jul. 18, 2022 3:15 AM ETVanguard Energy ETF (VDE)14 Comments

Summary

  • The Energy sector has sold off recently, opening up a relative value play in my mind. In fact, it is down almost 20% in the last one month.
  • The income story for this sector remains positive. With interest rates rising and inflation remaining high, this is a critical attribute.
  • Oil's gains are at risk if the conflict in eastern Europe comes to a peaceful resolution. However, the war there appears to be escalating, not de-escalating.
  • OPEC+ has pushed back on increased production, meaning higher prices are likely here to stay.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »

The Index of Oil. Up.

PashaIgnatov

Main Thesis & Background

The purpose of this article is to evaluate the Vanguard Energy ETF (NYSEARCA:VDE) as an investment option at its current market price. This is my preferred option for Energy exposure. It is a simple, passive strategy

Fund Performance

Fund Performance (Seeking Alpha)

Sector Performance

Sector Performance (S&P Global)

VDE's 1-Month Performance

VDE's 1-Month Performance (Seeking Alpha)

Brent Crude Oil Price

Brent Crude Oil Price (Bloomberg)

Percentage of Income Going To Food & Fuel

Percentage of Income Going To Food & Fuel (BlackRock)

U.S. Oil Consumption

U.S. Oil Consumption (U.S. Energy Information Administration)

Expected Earnings Growth in Q2 (By Sector)

Expected Earnings Growth in Q2 (By Sector) (Yahoo Finance)

Annualized Returns (By Decade)

Annualized Returns (By Decade) (JPMorgan Chase)

VDE's Top Holdings

VDE's Top Holdings (Vanguard)

Please consider the CEF/ETF Income Lab

This article was written by

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CEF/ETF income and arbitrage strategies, 8%+ portfolio yields

I've been a successful investor for about 15 years and my aim is to help my followers on their journey. I won't pump risky investments nor discuss topics I don't genuinely follow and research. In that spirit, I list my portfolio here for transparency.  

I'm a native New Yorker and I work for a major U.S. bank. I escaped to North Carolina for graduate school and I don't see myself ever leaving. I was a D1 athlete in college (men's tennis) and compete competitively to this day. My Bachelor's and MBA are both in Finance.

Broad market: VOO; QQQ; DIA, RSP

Sectors: VPU / BUI; VDE, RYE; KBWB; XRT

Non-US: EWC; EWU; EIRL; EWA

Dividends: DGRO; SDY, SCHD

Municipals/Debt Funds: NEA, BBN, PDO, PCK, VCV, PML

Stocks: WMT, JPM, MAA, SWBI, MCD, DG, WM

Cash position: 30%

Disclosure: I/we have a beneficial long position in the shares of VDE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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