It’s not easy being green. 🐸 And investing in 2022 has been a tough ride. Of the 11 sectors that make up the S&P 500 index, only two managed to generate positive returns in the first quarter of the year: utilities and energy. Ah, so that’s where all our hard-earned dollars have been going. 💸
Things have only been heating up further for oil and gas companies, and not just in a ‘glacier melting, global warming’ sort of way. Earnings from big fossil fuel companies this year have been getting more oiled up than Pita Taufatofua, Tonga’s iconic flag bearer. Last week oil giant Shell (SHEL) reported their highest quarterly profit since 2008. Exxon Mobil’s (XOM) first-quarter profit more than doubled year-on-year, while Chevron’s profit (CVX) quadrupled. That’s pushed up share prices of oil producers, with the iShares US Energy ETF (exchange traded fund) (IYE) on fire, up 41% this year. 🔥
But what about ‘green’ focused ETFs that have shunned the big oil companies? Are green investors getting drilled by not owning oil stocks? Well, it depends.
Although the energy sector is big, energy companies make up less than 4% of the whole S&P 500. That means that while the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, is down almost 14% so far in 2022, their sister fund, the SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX), which excludes 15 big name energy stocks, is down just one percentage point more, at -15%.
But oil prices are notoriously volatile and looking over a longer period the picture shifts. Over the last five years the S&P 500 index excluding fossil fuels actually returned 0.2% more than the standard S&P 500 ETF. It’s not much, but it might help to put a bit more charge in the Tesla.