about 2 years ago • 1 min
For all the hype around climate change, electric vehicles, and the transition to greener energy, investments in fossil fuel producers have beaten those in clean energy this year for the first time since 2016.
The chart plots the Vanguard Energy ETF (ticker: VDE) divided by the iShares Global Clean Energy ETF (ticker: ICLN). When the line is rising, as in 2021, the Vanguard fund – which invests in traditional energy stocks like Exxon Mobil, Chevron, and ConocoPhillips – is outperforming the iShares fund – whose biggest holdings include solar cell maker Enphase Energy and wind turbine producer Vestas.
After a tough 2019 and an even tougher 2020, dirty energy stocks have rebounded relative to their cleaner cousins. This year’s reversal has been driven by a global economic boom pushing up demand for all forms of energy, challenges ramping up the supply of oil and natural gas, and investors cooling on stocks reliant on future earnings growth.
As investors seek ways to shield their portfolios from rising inflation in 2022, it’s possible that oil and gas stocks that trade at much cheaper valuations and pay healthy dividends will find favor once again – assuming investors can stomach the idea of profiting from the sale of fossil fuels.
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