Energy ETF investing

What happened: Recent research from Bloomberg suggests that increasing exposure to energy stocks and U.S. Treasury bonds could potentially reduce portfolio volatility compared to the S&P 500 index. The Vanguard Energy ETF (VDE) has delivered 21.1% annualized returns over the past five years, outperforming the S&P 500. Meanwhile, the Global X - MLP & Energy Infrastructure ETF (MLPX) and the First Trust North American Energy Infrastructure Fund (EMLP) are two other energy ETFs under consideration, with MLPX being more cost-effective and EMLP offering broader diversification.

Market impact: This narrative drives interest in energy ETFs, affecting energy companies and investors seeking to reduce portfolio volatility. It also influences the ETF sector, with VDE, MLPX, and EMLP seeing increased scrutiny and potential inflows. The energy infrastructure space, in particular, benefits from the focus on these ETFs.

What to watch next: The upcoming earnings reports from energy companies like ExxonMobil (XOM) and Chevron (CVX) in late April and early May will provide insights into the sector's health. Additionally, the U.S. Energy Information Administration's (EIA) monthly energy outlook in May will offer guidance on energy demand and supply dynamics, further influencing energy ETF performance.