Oil and natural gas are hot, and so are American energy stocks. But investors, whether they have been along for the ride or are just thinking of joining now, may be wary of getting burned.
January through March of this year was the best quarter for the sector since 1970, according to BofA Global Research. While the S&P 500 is down roughly 13% year to date, the energy sector is up 49%. That follows a year when energy stocks beat the broader index by 21 percentage points.
Passive index investors didn’t get a huge lift from energy’s shining moment. Energy accounted for just 2.7% of the S&P 500 at the end of last year, a far cry from the 11% weighting the sector commanded a decade ago. And, according to BofA, active funds were significantly underexposed to the energy sector in the first quarter. Today, the…
