Invesco Energy Exploration & Production ETF

PXE

Market cap $67.7M

RSPG, IEO, FCG, PXE and XOP are included in this Analyst Blog.

The energy sector has become a leader after being a laggard over the past two years.

The Invesco Energy Exploration & Production ETF is a hold due to mixed factors impacting the oil and gas industry. PXE has underperformed compared to its peers over the past decade, but has outperformed the overall market in the past year. While oil and gas will remain dominant in the short term, renewable energy sources will eventually overtake them in the long term.

Oil prices surged recently to their highest levels since October as investors closely monitored escalating geopolitical tensions in key regions. The improved demand outlook is another reason for which oil prices can go higher.

Energy has been the best-performing sector of March, driven by a sharp rise in oil prices. We have highlighted the five best-performing ETFs from the sector that led the market last month.

Wall Street wrapped up the first quarter with a big bang, driven by strong corporate profits, enthusiasm around AI and hopes that the Fed will cut rates.

Oil prices spiked last week, gaining 3% to near four-month high, buoyed by rising demand forecasts by the International Energy Agency, geopolitical tensions and domestic market dynamics.

Invesco Energy Exploration & Production ETF is a passively managed fund that provides exposure to oil and gas companies. The oil and gas industry faces competing priorities, with demand recovering despite the push for low-carbon energy. PXE's allocation to firms across the market cap spectrum and the high rate of M&A activity in the industry make us like this fund.

With an ever-growing list of similar-sounding ETFs to choose from, finding the best is an increasingly difficult task. How can investors change the game to shift the odds in their favor?

Energy, Consumer Non-cyclicals, and Financials sectors earn an Attractive-or-better rating at the beginning of 1Q24. Investors should focus on sector funds in the Energy, Consumer Non-cyclicals, and Financials sectors for quality stocks.