S&P 500: This Asset Tops Bitcoin, Semis And Gold

Investors are chasing after a variety of assets — leading to stunning price jumps. But the hottest commodity of them all is also one of the most old fashioned: Oil plus S&P 500 energy stocks.


Gains in the price of oil this year are topping some of the hottest asset classes, such as shares of computer semiconductor makers amid a global chip shortage and Bitcoin. Oil is also topping gold price gains in the age of inflation. It’s just the latest sign of just how powerful the run-up in S&P 500 energy companies is.

“Crude prices pushed higher after the U.S. inflation report,” said Edward Moya, senior market analyst at Oanda. Strong inflation is bullish for oil, and it takes more dollars to buy the same amount of oil. “The inflation report was hotter-than-expected,” he said.

Booming Oil Bumps Bitcoin, Chips

Bitcoin and semiconductors get all the attention. But oil is quietly making investors the most money this year.

The Energy Select Sector SPDR Fund (XLE) is up 47% — just this year. That absolutely smashes the gains of all the 11 S&P 500 sectors. And it tops the 26.9% gain of the No. 2 S&P 500 sector: Financial Select Sector SPDR ETF (XLF). Keep in mind all 11 S&P 500 sectors are positive in 2021 so far and the S&P 500 closed at a high on Thursday.

And yet, the price of oil only pushes higher. The price of a barrel of light crude oil on the Nymex hit nearly 70 a barrel Thursday, up more than 90% from its low point in a year, says S&P Global Market Intelligence.

Those price gains flow downstream. Just this year, the United States Oil Fund (USO), which tracks the price of oil, is up 44.9%. That blows away the 14.3% gain in the iShares PHLX Semiconductor ETF (SOXX), a $6.6 billion in assets ETF that tracks the red-hot semiconductor industry.

And get this: You’re making more money on oil than Bitcoin, too. The $21.4 billion Grayscale Bitcoin Trust (GBTC) is now down 5% this year. And gold? The SPDR Gold Trust is down 0.3% this year.


Digging Into S&P 500 Energy Stocks

And investors are finding yet other ways to extract bigger gains, still, from jumping oil prices. The MicroSector US Big Oil 3X Leveraged fund, which amplifies gains on holdings of energy companies is up more than 200% this year. It’s the top-performing energy fund this year so far, says Morningstar Direct.

But you don’t need to leverage oil to amp up returns, though. Going small makes for even bigger gains. The Invesco S&P SmallCap Energy ETF (PSCE) is up more than 80% this year. The ETF’s top holding, the small cap $4.5 billion in market value exploration company PDC Energy (PDCE), is up more than 127% this year.

Don’t Assume S&P 500 Energy Is Tomorrow’s Future

Oil is on a hot streak this year, but it’s only making up a pittance after many years of underperformance.

If you bought the United States Oil Fund three years ago, you’d be down 54%. And the ETF is down by nearly half in the past five.

On the other hand, the iShares PHLX Semiconductor ETF is up more than 350% in the past five years. And Bitcoin is up orders of magnitude more. Grayscale Bitcoin Trust is up nearly 2,900% in five years. Even the SPDR Gold Trust is up more than oil in the past five years: 46%.

Meanwhile, a newish asset is erupting now: Rival cryptocurrency to Bitcoin: ethereum. Grayscale Ethereum Classic Trust (ETCG) is up 426% this year. That makes it the top performing fund in the ETF universe this year, says Morningstar Direct.

So while S&P 500 energy is hot this year, don’t expect it to continue.

“Despite growing demand for diversified energy ETFs, such as Energy Select Sector SPDR, Vanguard Energy (VDE) and iShares US Energy (IYE), we have concerns about the reward potential,” said Todd Rosenbluth, head of mutual fund and ETF research at CFRA. “We think recent performance will be short lived.”

Oil Tops Bitcoin, Semis And Gold In 2021 So Far

But oil is a laggard longer term

ETF Symbol YTD ch. 3-year ch. 5-year ch.
MicroSectors U.S. Big Oil Index 3X Leveraged (NRGU) 202.1% n/a n/a
Invesco S&P SmallCap Energy (PSCE) 82.7% -52.59% -51.10%
United States Oil Fund (USO) 44.9% -54.95% -49.63%
iShares PHLX Semiconductor (SOXX) 14.3% 125.85% 356.46%
SPDR Gold Trust (GLD) -0.3% 44.49% 46.00%
Grayscale Bitcoin Trust (GBTC) -5.0% 139.37% 2877.18%
Source: IBD, S&P Global Market Intelligence

Follow Matt Krantz on Twitter @mattkrantz


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