The energy transition portfolio, including Alerian MLP ETF (AMLP) and ALPS Clean Energy ETF (ACES), provides an investment mechanism balancing renewables and fossil fuels. Although clean energy ETFs encountered difficulties in 2023, long-term prospects remain promising. AMLP outperforms broader markets, and ACES offers exposure to North American clean energy sector companies. Both ETFs capitalize on renewables’ growth and traditional energy sources’ continued significance.
The passenger airline industry, significantly impacted by the COVID-19 pandemic, is on the mend as global travel demand returns. Airlines, particularly legacy and global carriers, are stabilizing costs, achieving operational reliability, and repairing their balance sheets. There’s noticeable growth in long-haul travels with increasing numbers of leisure travelers buying premium services. Investor sentiments towards airlines are improving with the recovery, making JETS ETF, which is heavily weighted towards larger U.S. airlines, an attractive investment. An 18% growth in the ETF’s value is expected within the next nine months.
The VanEck Vectors Oil Services ETF (OIH) offers investors broad exposure to the upstream oil industry, including sectors like oil equipment, services, and drilling. Tracking the MVIS U.S. Listed Oil Services 25 Index, the fund has $2.3 billion in assets and includes major holdings such as Schlumberger NV, Halliburton Co, and Baker Hughes Co. Despite its short-term volatility due to oil price fluctuations and global economic conditions, OIH provides a potentially growthful and diversified investment option for those bullish on the energy sector.
State Street Global Advisors (SSGA) has announced major reductions to the Total Expense Ratios (TER) of its Europe-based ETFs with both traditional and ESG-enhanced S&P 500 exposure. The fee cuts, which will take effect from November 1, 2023, will make the SPDR S&P 500 UCITS ETF (SPY5) the lowest-cost S&P 500 ETF in Europe.
Renewable energy discussions often focus on electric vehicles, solar and wind, but overlook the importance of strengthening electrical grids, an essential component for energy transition and national security. KraneShares Electrification Metals Strategy ETF (KMET) offers exposure to six metals critical for grid enhancements. Anticipated government expenditure, including on commodities such as aluminium and copper, offers a promising outlook for KMET.
Investors keen to seize current market opportunities should consider diversifying into broad-basket commodity ETFs, rather than betting on individual ones. Two notable funds are the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) and the Invesco DB Commodity Index Tracking Fund (DBC). Both funds provide exposure to heavily-traded commodities, though PDBC doesn’t issue a K-1, making it more tax-friendly. They also have different fee structures, with PDBC charging 59 basis points and DBC 87.
Climate change is severely impacting crucial inland water trade routes, leading to increased rain, prolonged droughts, and low water levels across the world. Vital waterways such as the Rhine in Europe and the Panama Canal face severe droughts, resulting in reduced capacity for ship transportation and increasing trade costs. This environmental crisis demands adaptive measures, such as ship design modifications and infrastructure investment, to sustain global trade. However, the implications also extend to broader economic sectors, resulting in production slowdowns and economic activity loss.
The global banking system is generally resilient, according to a recent global stress test, but higher interest rates expose vulnerabilities in some banks and could trouble more if monetary policy remains tight. Increased efforts are needed to identify weak lenders, with the analysis suggesting smaller US banks and some Asian and European lenders are at risk. Policymakers are urged to consider new measures, including advanced stress tests, better regulatory responses, and improved access to central bank lending facilities.
PepsiCo is leading in the global beverage and convenience food industry due to portfolio premiumization and innovative product offerings, driving strong net pricing growth. Market fears related to GLP-1 anti-obesity drugs affecting PepsiCo’s growth are likely unfounded due to the drugs’ potential side effects and high costs. The company has solid financials, and long-term growth targets meet historical performance. Therefore, the current decrease in stock price represents a potential long-term investment opportunity.
The construction materials industry displays the highest value and quality scores in the sector, with the Fidelity MSCI Materials Index ETF (FMAT) providing an alternative to the dominant Materials Select Sector SPDR Fund ETF (XLB). Despite recent improvements, the mining/metals industry remains the most overvalued sub-sector. FMAT offers cheaper investment options than XLB and is a good choice for investors seeking exposure to basic materials.
The author discusses the relevance of monitoring the health of the transportation industry and the potential of the iShares Transportation Average ETF for sector exposure. Noting fragile recovery and high valuations, the author suggests caution with transportation stocks and endorses a gradual buying approach, especially for railroad stocks. Despite uncertainties, the author sees opportunities in any significant sell-off, intending to gradually buy on the weakness in the transportation sector.
Argentina’s severe drought has led to a significant reduction in soybean and wheat supplies, pressuring their prices. The top exporter country’s soybean processing plants are facing a shortage, leaving two-thirds of their capacity unused. Wheat yields are also expected to suffer ‘massive losses’, and these conditions are providing investment opportunities through funds like the Teucrium Soybean Fund (SOYB) and the Teucrium Wheat Fund (WEAT).
Since the start of the year, Tesla has been using price cuts to stimulate demand — a strategy which has largely worked to date. However, recent price reductions that bring Tesla vehicles’ prices closer to those of conventional cars have alarmed some investors. Despite some criticism, the lowered prices have reportedly boosted demand for Tesla in the highly competitive global EV market.
Major airlines including American, Delta, Southwest, and United have discovered unauthorized parts in their aircraft engines. These parts, sourced from London-based broker AOG Technics, lack required certification. Although the issue impacts a small number of planes, its extent is uncertain due to missing documentation. Legal action has been initiated against AOG Technics, with authorities and engine manufacturers seeking to track down installed parts. The incident, however, is unlikely to disrupt industry operations significantly.
