The iShares S&P TSX Capped Energy Index Fund (TSX:XEG) has experienced an 18% decline in 2017 as a slump in oil has put downward pressure on Canadian energy equities. This ETF targets exposure to companies in the Canadian energy sector and can be used to express a sector view. It seeks long-term capital growth by replicating the performance of the S&P/TSX Capped Energy Index.
After hitting a bottom of $42.29 in late June oil has bounced back to near the $50 dollar mark. The iShares Capped Energy ETF has increased 4% month over month. Goldman Sachs issued a note on Thursday in which it expressed optimism for a continued rebound for oil. A falling rig count combined with rising demand should provide tailwinds for the oil price.
Several of the world’s largest economies, including the United States, India, and China are driving the price up with increased consumption. Ultimately Goldman kept a price target of $55 but urged caution as a quick price recovery has the potential to reverse gains as production increases in response.
In the long term, experts, analysts, and oil executives alike are pessimistic that oil will be able to rebound to the levels before the 2014 collapse in prices.
Still, investors confident that the rebound will continue into 2017 can feel confident that this ETF will deliver along with it into the latter half of the year.
