How to invest in energy?
bbmanhattanEnergy is the raw material that literally moves the world, one of the most important points of the modern economic system.
Energy is the raw material that literally moves the world, one of the most important points of the modern economic system.
There are many reasons we should have at least one foot in the energy sector; we must consider that the size of the energy market globally is around $ 7 trillion. Likewise, energy demand is expected to grow more than 30% by 2013.
One of the points that we must consider when investing in this sector is to investigate future projections; for example, renewable energies are expected to continue on this upward path of growth and market positioning. Therefore, it should be aware of this item of the sector.
Some points to consider to start investing in energy are the following:
If you want to invest in a company or an ETF connected to oil, one of the main variables to monitor will be the price of gasoline since these two maintain a high correlation.
Check the technology used by the companies you are interested in and the percentage of budget they allocate to research and development.
If looking to invest in a renewable energy company or ETF, check out the projects they bring in, as well as their potential.
Renewable energies could benefit in the future from promising advances in public policy that become a catalyst for growth.
The costs of solar and wind energy continue to be optimized, giving rise to greater usability and profitability.
There are many ways to classify energy; in this case, we will divide it into two parts. The first is oil and gas, and the second is renewable energy. We will show you some options to start investing in stocks or ETFs in both divisions through your GBM + platform.
Oil and gas companies
INNOVA*
It is a Mexican company that is dedicated to investing in the energy sector of its country. Since they arrived in 1996, they have positioned themselves as leaders in the energy industry. Its main service is to develop, build and operate energy infrastructure in Mexico. At the end of 2020, they have approximately $ 10.5 billion in total assets.
MATTER*
Halliburton is a company dedicated to services related to oil, currently has a presence in more than seventy countries.
RDS A/B
Royal Duch Shell plc is a group of energy and petrochemical companies with more than 80,000 employees in more than 70 countries. Its main services are comprehensive gas and energy solutions.
Renewable energy companies
First Solar is a company that is in the field of solar energy. They have developed, financed, designed, built, and thus also operate many of the largest photovoltaic plants in the world.
Solar Edge is another company where you can invest in electrical energy. They began operations in 2006, and to date, they have managed to be placed in more than 133 countries around the world and more than 3,400 employees and more than 2,000,000 monitored systems in the various countries.
NEW*
Nextera Energy is a company that ventures into renewable energies through wind and solar energy. Nextera, being the company that sells the most on these two lines globally, you can get an idea of its size; it has a capitalization value of more than 100 billion dollars.
ETFs that include oil and gas companies
If you want to invest in the United States energy sector that includes oil and gas companies, the XLE * ETF is an option; the ETF has a total of assets with a value of 23,022,700.00 dollars largest of the sample that we will present.
This is an ETF managed by BlackRock, which offers you exposure to companies in the United States responsible for producing and distributing oil and gas. Analyzing the fund with greater specificity, you will find the companies that comprise it in 5 main divisions:
- Integrated oil and gas.
- Oil and gas exploration and production.
- Storage and transportation of oil and gas.
- Refining, commercialization, and transportation.
- Oil and gas equipment and services.
If you are looking to invest in companies worldwide whose role is oil and gas production and distribution, the IXC may be for you. The geographic exposure you can cover with this fund is the United States, Canada, United Kingdom, France, Brazil, Australia, Italy, Finland, Norway, and Japan.
To emphasize companies dedicated to exploration and production in the United States, this ETF Ishares US Oil & Gas Exploration & production arises, which assigns a greater weight to this type of companies, placing companies such as ConocoPhillips, Eog Resources Inc with greater weight. And Marathon Petroleum Corp.
X*
Finally, the last ETF that we will see about oil and gas is the "Oil & Gas Equipment & Services ETF," and as its name mentions, its function is to find the equipment and services companies in the sector within the S&P.
Renewable Energy ETFs
Invesco Global Clean energy is an ETF that invests globally in renewable companies. The companies that comprise it are mostly located in the United States, followed by Germany, the United Kingdom, Canada, Hong Kong, Norway, the Republic of Korea, Spain, China, and Sweden.
This ETF focuses primarily on US-listed companies whose products and services drive clean energy through innovation. In addition to the 76% of the portfolio in the United States, the rest of the weighting is located in China, Canada, Switzerland, and Chile.
FAN*
First Trust Global Wind Energy is an ETF whose investment objective is to include companies identified as providers of goods and services only in the wind energy division.
SMOG*
VanEck Vectors Low Carbon Energy is an ETF whose investment philosophy is to add to its portfolio companies whose business is mainly in the wind, solar, hydro, hydrogen, bio-Diesel, geothermal technology, electric vehicles, and industrial materials that reduce emissions. Carbon or energy consumption.
iShares Global BlackRock manages clean Energy and whose investment objective is to have exposure to companies that produce solar, wind, and other renewable sources. This ETF has companies from different countries, including the United States, Denmark, China, Canada, Spain, and Italy.
In conclusion
Thanks to the democratization of investments with relatively low amounts, we can have access to any energy as we have seen in the previous examples and invest through an ETF or directly with the company. These are some financial assets that you could review in greater depth if you are interested in diversifying your portfolio, including the energy sector. You can even choose what kind of energy you want to invest in (gas, oil, the solar, wind, among others).
Definitely, the issue of energy will always be relevant news in the financial world; it will be necessary to go even deeper in this sector to choose intelligently and take advantage of the fruits of our investments.
If you are starting your investment journey or already have a portfolio created, and you want to invest in a strategy that includes the energy sector, you can do so through https://dotbig.com/.