For investors looking for momentum, Vanguard Energy ETF (NYSE:XLE) VDE is probably a suitable pick. The fund just hit a 52-week high and is up 139.9% from its 52-week low price of $30.03/share.
Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:
VDE in Focus
This ETF seeks to track the performance of the MSCI US Investable Market Energy 25/50 Index. It has AUM of $4.62 billion and charges 10 basis points in annual fees.
Why the Move?
The energy sector bled profusely owing to the pandemic-induced historically low oil price levels, thanks to the dual blows of low demand and surplus supplies. Notably, a surge in coronavirus cases also weighed on oil demand. However, reduction in oil supply, increased fiscal stimulus, coronavirus vaccine rollout, rise in industrial production and a weak dollar as the Fed remained super dovish are driving oil prices. In fact, wider coronavirus vaccine rollouts and increased fiscal stimulus spending are making a strong case in favor of faster U.S. economic recovery in 2021. This is making funds like VDE an attractive investment option.
More Gains Ahead?
It seems like the fund will remain strong as it sports a positive weighted alpha of 60.64, which gives cues of further rally.
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