Rising oil has advisors adjusting energy allocations

investmentnews.com:

Advisors ignoring the rise in crude oil may be missing out on a gusher of profits for their clients.

A barrel of US crude for April delivery cost $81.64 at last check, up 13.7 percent year-to-date and up 22 percent over the past 12 months. That’s a pretty slick return for the black gooey stuff, but it’s been a pretty stealthy rise, especially considering all the attention being paid to the bull runs in other markets.

For example, the S&P 500 is up 9 percent by comparison and the tech-heavy QQQ ETF has risen 9.3 percent since the start of the year. Meanwhile, gold, which everybody is going gaga over, has returned 4.7 percent so far in 2024. A shiny return for the yellow metal for sure, yet still 9 percentage points below that of “black gold.”

Meanwhile, alternative, or so-called clean energy, stocks, have had a rougher time out of the gate in 2024. The iShares Global Clean Energy ETF (ICLN), which holds a number of solar stocks, is down 12.6 percent so far this year.

While the year is still young and this trend could change (and most likely will), Tyler Rosenlicht, portfolio manager at Cohen & Steers, said over the long term, the energy transition from traditional to alternative sources will take longer than expected. In the meantime, during periods of economic strength like the one the US is currently experiencing, the demand for traditional energy, such as oil and natural gas, will remain on the rise.

“There’s lots of investment in renewables, and we think that’s great and a great investment opportunity. But we’re also going to rely on traditional forms of energy for a really long time,” he said. “So as we think about the energy transition, we do think there’s a transition in market share, but it’s really more of an