The Best And Worst Energy ETFs Of 2012

The energy sector has been anything but stable this year, as commodities as a whole suffered at the hands of volatile trading. Crude oil prices surged all across the board while popular natural gas struggled to maintain a direction. With 2012 coming to a close, we take a look back on the year and outline the best and worst performing energy ETFs. Note that this list excludes leveraged and inverse products [for more energy ETF news and analysis subscribe to our free newsletter].

The Best: Slim Pickings

Just five energy ETFs were able to turn in positive performances this year, as the sector had trouble finding its footing.

  • United States Gasoline Fund (UGA): The year’s top performer was the gasoline ETF, which maintains exposure to front-month RBOB gasoline futures. Despite crude oil’s woes for 2012, this ETF jumped nearly 17% on the year. Note that gas prices are at their lowest point of 2012, but UGA is hanging on to a massive summer rally to close out the year strong.
  • GasMLCX Biofuels Index TR ETN (FUE): This ETN is subject to relatively low liquidity–FUE has just $2.8 million in assets and trades no more than 3,500 shares per day–but its 2012 performance was quite strong. Biofuels were able to cash in on the summer rally for corn and other grains as FUE jumped about 7.8% in 2012.
  • United States Brent Oil Fund (BNO): Unlike its lighter, sweeter counterpart, Brent oil was able to turn in a positive 2012. This fund, which has just under $44 million in total assets, was able to gain 6.7% in 2012 as Brent was not subject to the same problems that confronted WTI.

The Worst: A Year of Contraction

The majority of these funds turned in very poor returns for the year, as WTI and natural gas dragged down a number of related funds.

  • United States Natural Gas Fund (UNG): No surprise here. UNG has not only been one  of the worst performing commodity ETFs of all time, but is one of of the worst performing ETFs period. The fund shaved off another 24% this year as warm weather kept pressure on NG prices. Despite the fund’s woes, it continues to maintain more than $1.1 billion in assets and trade more than eight million shares each day.
  • S&P GSCI Crude Oil Tot Ret Idx ETN (OIL): This fund tracks an index that reflects the returns that are potentially available through an unleveraged investment in West Texas Intermediate (WTI) crude oil futures contracts plus the T-Bill rate of interest that could be earned on uninvested cash. The strategy, however, has not paid off; OIL is down 17% this year as WTI has been weak and the subject of much speculation [see also 25 Ways To Invest In Crude Oil].
  • DB Energy Fund (DBE): The next worst-performer that doesn’t cater exclusively to NG or crude, DBE is one of the more popular funds in the energy space as it offers exposure to the segment as a whole. The ETF slipped 1.2% on the year, as its diversity was able to save it from the losses exhibited by UNG and OIL.

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Disclosure: No positions at time of writing.

This entry was posted in Actionable Ideas, Biofuels, Brent Oil, Commodity ETF Analysis, Commodity ETFs, Commodity Futures, Energy, Gasoline, Natural Gas, WTI and tagged , , . Bookmark the permalink.

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