(MENAFN- ValueWalk) The Energy sector ranks last out of the 11 sectors as detailed in our report. , the Energy sector ranked last as well. It gets our Very Unattractive rating, which is based on an aggregation of ratings of 28 ETFs and 104 mutual Energy sector as of January 8, 2018. See a recap of our .
[REITs]
Figures 1 and 2 show the five worst rated ETFs and mutual funds in the sector. Not all Energy sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 22 to 333). This variation creates drastically different investment implications and, therefore, ratings.
Investors should not buy any Energy ETFs or mutual funds because none get an Attractive-or-better rating. If you must have exposure to this sector, you should buy a basket of Attractive-or-better rated stocks and avoid paying undeserved fund fees. Active management has a of not paying off.
Our empowers our unique, which leverages our rigorous analysis of each fund's holdings. We think advisors and investors focused on prudent investment decisions should include analysis of fund holdings in their research process for ETFs and mutual funds.
Figure 1: ETFs with the Worst Ratings – Top 5
* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
Six ETFs (ETHO, PUW, TBLU, QCLN, PXE, PXJ) are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
Figure 2: Mutual Funds with the Worst Ratings – Top 5
* Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
Four mutual funds (ALTEX, INNNX, RGLIX, BACIX) are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
There are no Energy ETFs or mutual funds that receive a Neutral-or-betting rating and meet our liquidity minimums.
First Trust Energy AlphaDEX Fund (FXN) is the worst rated Energy ETF and Saratoga Energy and Basic Materials Portfolio (SBMBX) is the worst rated Energy mutual fund. Both earn a Very Unattractive rating.
184 stocks of the 3000+ we cover are classified as Energy stocks.
The Danger Within
Buying a fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on fund holdings is necessary due diligence because a fund's performance is only as good as its holdings' performance. Don't just take our word for it, on this matter.
PERFORMANCE OF HOLDINGs = PERFORMANCE OF FUND
Analyzing each holding within funds is no small task. Our enables us to perform this diligence with scale and provide the to fulfill the fiduciary duty of care. More of the biggest names in the financial industry (see ) are now embracing technology to leverage machines in the investment research process. Technology may be the only solution to the dual mandate for research: cut costs and fulfill the fiduciary duty of care. Investors, clients, advisors and analysts deserve the latest in technology to get the diligence required to make prudent investment decisions.
Figures 3 and 4 show the rating landscape of all Energy ETFs and mutual funds.
Figure 3: Separating the Best ETFs from the Worst ETFs
Sources: New Constructs, LLC and company filings
Figure 4: Separating the Best Mutual Funds from the Worst Mutual Funds
Sources: New Constructs, LLC and company filings
This article originally published on .
Disclosure: David Trainer, Kyle Guske II, and Pete Apockotos receive no compensation to write about any specific stock, sector or theme.
Follow us on , , , and for real-time alerts on all our research.
Ernst & Young's recent white paper ' proves the superiority of our holdings research and analytics.
Article by Pete Apockotos,
MENAFN301402201800490000ID1096407529
--MENAFN301402201800490000ID1096407529-->
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.