A Value-Investing Takeaway from the Energy Sector Meltdown

Wesley Gray |

My team and I at Alpha Architect sat down recently and did a quick and dirty analysis of the S&P sector ETFs on a YTD basis and over the past two months. See what we found below:

Here are the sector portfolios we used for our analysis:

  • XLE Energy

  • XLF Financials

  • XLU Utilities

  • XLK Technology

  • XLB Materials

  • XLP Consumer Staples

  • XLI  Industrials

  • XLV  Health Care

Results are net of management fees and transaction costs. All returns are total returns and include the reinvestment of distributions (e.g., dividends). Data is from Bloomberg.

In Q1, healthcare and energy were cheap on a relative basis, but a value investor needed to be prepared for short-term volatility: healthcare’s future was/is unclear and oil prices were on a roller coaster ride!

Sure enough, the short-run volatility showed up!

YTD Charts for the Sector SPDR ETFs:


Here are the performance figures over the past two months–a volatile time in the market: Health Care did the best by generating a total return of 9.7%

Utilites did the worst by losing 7.5% YTD

Energy has been on a whipsaw rollercoaster!

Results Over the Past Two Months

Here are the performance figures over the past two months–a volatile time in the market:


  • Health Care maintained strong relative performance

  • Energy did the worst by losing 7.9% over the past 2 months!

Value investors managed to catch a breather with healthcare, but energy investing has tried the patience of investors focused on the short-term!

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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