- Industry concentration risk as over 80% of the fund's assets are invested in the energy sector. The fund's performance depends on conditions in this industry.
- Stock market risk as the fund seeks to track its energy sector index. It may underperform during periods where energy stocks decline overall.
- Currency risk is moderate as the majority of revenues for holdings are in US dollars. Fluctuations between the US dollar and currencies like the British pound could impact returns.
VAR and Absolute Risk
The annualized 1-day 99% VaR of VDE is 14.14%. This means there is only 1% probability
1. VANGUARD WORLD FUND ENERGY ETF
Vanguard ENERGY ETF is an exchanged-traded
fund incorporated in the US. The fund seeks to
track the performance of the MSCI US
Investable Market Energy Index. The Index
consists of large, medium sized and small US
companies within the energy sector that are
involved with the construction or provision of
oil rigs as well as the exploration, production
and refine of oil/gas products.
ISIN: US92204A3068
SEDOL: B031N66 US
CUSIP: 92204A306
Group 4 Cheryl Cheng, YI-WEN WANG and Nicholas Todd
2. 1
2016/2/29 VANGUARD ENERGY ETF (VDE US EQUITY)
Bloomberg VDE US equity Currency USD Exchange NYSE Arca Domicile US
Clear Sub-Fund Objective
Vanguard Energy ETF is an exchange-traded fund incorporated in the USA. The Fund seeks to
track the performance of the MSCI US Investable Market Energy Index. The Index consists of
large, medium-size and small US companies within the energy sector that are involved with the
construction or provision of oil rigs as well as the exploration, production and refining of oil/gas
products.
Entry Price 79.77
Stop Loss 74.27
Target Price 90.47 USD 3 M 1 year 3 years 5 years
Net of Fees -16.0% -27.6% -8.9% -5.3%
Quick Facts Benchmark -15.9% -27.6% -8.9% n/a
Fund Tracking Error 1.3% 1.2% 2.7% 2.7%
Management Company Correlation 1.00 1.00 0.99 n/a
Vanguard Group Inc. Beta - 0.99 0.99 n/a
Benchmark R2 - 1.00 0.99 n/a
MSCI US 25/50 ENR IM GRL Inception 5.70% n/a 1.8% n/a
(Ticker M5US5ENI Index)
Volatility
360D
28.38 28.62 - -
Strategy : Fully Replication
Expense Ratio: 10%
Total Asset : USD 3.19 B
Currency US Dollar
Dividend Schedule : Quarterly
Inception Date : 29/09/2004
Performance
Cumulative Total Return
(as of 29/03/2016)
1m : 10.07%
3m : 2.42%
12m : 3.57%
Trading
Price : 78.21
12 Month Div Yield : 6.75 %
30 Day Avg. Volume : 64.5336 M
Implied Liquidity : 3.67 M
3. 2
Contents
Vanguard Energy ETF ………………………………………………………………………………………..…. 1
Overview
Industry Overview ………………………………………………………………………………..…. 3
Advantaged of an ETF ………………………………………………………….…………….……. 3
Comparative Analysis …………………………………………………………………….……………….……. 4
Fundamental Analysis
Company Breakdown ………………………………………………………………………..….…. 5
Geographical Breakdown ………………………………………………..……………..………… 6
Equity Characteristic ………………..………………………………………………….…………… 7
Performance …………………………….……………………………………………….……………… 8
Risk Analysis
Macroeconomic Shocks ………….…………………………………………….….……..………… 9
Risk …………………………………………………………………………………….….……..…………… 9
VAR and Absolute Risk ……………………………………………………….…………………….. 10
Tracking Indicators …………………………………………………………….…….………………. 11
Skewness ………………………………………………………………………….……………………… 11
Return versus Risk …………………………………………………….…….………..………………. 12
Technical Analysis
Relative Strength Index ……..………………………………………….………….………………… 13
Bollinger Bands ………………….………………………………………….……….…………………… 13
Volume and Simple Moving Average ………………………………………………………….. 14
VDE Vs Crude oil, WTI Active Contract ………………………………………………………… 14
Elliot Wave ………………………………………………………………………………………………….. 15
Fibonacci Retracement ………………………………………………………………………………… 16
Fund versus Oil Volatility Index ………………………………………….………………………… 17
Conclusion ………………………………………………………………………………………………………………… 17
4. 3
Industry Overview
The Energy Sector:
Energy is fundamental to economic growth and environmental sustainability.
According to the International Energy Agency (IEA), even though oil prices have plummeted 70%
since June 2014, falling as low as $27 per barrel earlier this year, there is evidence that oil prices are
stabilising and could even begin to rise again. The IEA believes the non-Opec output would fall by
750,000 barrels per day (bpd) in 2016, compared with its previous estimate of 600,000 bpd and the
US production is forecast to decline by 530,000 bpd this year.
Supply and Demand:
Price of oil are starting to recover to about $40 per barrel after hitting a 12-year low in January. This
is due to the leading Opec nation Saudi Arabia and top non-Opec producer Russia stated that they
would freeze output.
A decrease in supply in oil will automatically increase the demand of oil in the market. It can be said
that the oil prices will reach a much desired balance in 2017.
Advantaged of an ETF
About ETFs
Benefits of investing in ETFs The use of ETFs has increased dramatically in recent years and there are
many benefits using ETFs as an investment tool and as part of a portfolio. They offer the same
benefits as the more traditional Mutual Funds at a greater level. They can provide broader
diversification within a portfolio, increased trade flexibility, lower cost, and increased transparency
and tax benefits. Investing in ETFs have all the trade combinations of investing in common stocks,
including limit-orders and stop-limit orders.
Vanguard Energy ETF
Investing in the Vanguard Energy ETF (VDE US) will provide QUMMIF with a portfolio exposure to the
Energy Sector specifically in the Oil and Gas market. Although the energy sector has been
experiencing a turbulent period we believe the potential gains that may be made with this ETF if the
market rallies will outweigh the possibility for losses over the 1-year period.
5. 4
Comparative Analysis
Table 1
Based on table 1 above, VDE US has the lowest TER (Total Expense Ratio), which indicates that it
spends the least in managing and operating the ETF. A low TER means that the investors can expect
more return from the profit generated by the ETF.
VDE US has the highest 30 day Average Daily Volume means that this ETF can be easily traded as it is
more competitive.
Investors can also expect a higher return from VDE US as it has the highest 12-month dividend yield
at 5.95%.
VDE FENY FILL NRGG Lynrgw
TER (Total Expense Ratio) 0.1 0.12 0.39 0.4 0.4
Tracking Error
YTD Daily Granularity 0.77 0.14 .52 0.9 0.9
Liquidity
Implied Liquidity 3669268 73530061 4805406 6395627 6395627
30days Average Daily
Volume 34.79 2.74 0.24 5.02 0.28
AUM (Assets Under
Management) 3,193.20 337.42 33.73 93.89 93.89
Div 12 month yield(%) 5.95 2.95 3.13 n/a n/a
Number of Holding 144 138 192 92 92
Dividend Net 3yr Growth Rate 30.36% n/a -2.36% n/a n/a
P/B Ratio 1.48 1.66 1.28 1.46 1.46
Sharpe Ratio 1 yr -0.55 -0.6 -0.42 -0.42 -0.52
P/E Ratio 314
Premium to NAV (MTD%) 13.85 11.57 12.7 10.98 10.98
6. 5
Fundamental Analysis
Company Breakdown
The major holdings within the Vanguard energy ETF include Exxon Mobil Corp, Chevron Corp
and Schlumberger LTD. A review of these major companies within the Fund indicate a strong
Buy Stance from other analyst. It is suggested by a consensus forecast amongst 26 polled
investment analysts advise that chevron will outperform the market. In addition the
majority of analyst forecast an improvement on 2015 dividend of 4.28 USD to increase this
fiscal year to 4.31 USD (1.66%). Exxon Mobil has a strong hold stance with some analyst
suggesting Buy. An attractive element of this stock is the consistent dividend yield of 3.45%
which is outperforming the market.
Schlumberger Ltd is the largest oilfield services company in the world with far-reaching
global operation. Analysts at UBS have increased their interest with Schlumberger Ltd
suggesting the company could be poised for years of solid growth with a forecasted price of
$87 (currently $72). As U.S. Oil and Oil services companies are prohibited from entering Iran
Schlumberger provides a diversification element to the ETF. The company has reported solid
fourth quarter earnings and investors can expect a solid dividend of 2.69%, this is evidence
of its resilience in a turbulent energy sector. In addition, Schlumberger proposed merger
with Cameron international corp. has been cleared.
The forecasted EPS for the next
financial year is positive for all the top
10 holdings in VDE US. The forecasted
FY2017 EPS is highest for Phillips 66
and Valero Energy Corp. Overall, the
forecasted EPS FY2017 promises a
good return.
11.26%
15.96%
1.79%
0.85%
6.83%
4.10%
4.27%
0.60%2.13%2.22%
49.32%
Contribution to Return (%)
EXXON MOBIL CORP
CHEVRON CORP
SCHLUMBERGER LTD
OCCIDENTAL PETROLEUM CORP
CONOCOPHILLIPS
PHILLIPS 66
EOG RESOURCES INC
KINDER MORGAN INC
VALERO ENERGY CORP
-2.5
2.5
7.5
XOM CVX SLB OXY COP PSX EOG VLO KMI HAL
Top10 Holdings EPS
EPS FY2016 EPS FY2017
7. 6
Chevron Corp is the highest contributor to return for the VDE US ETF followed by Exxon Mobil Corp
and Conoco Phillips.
Geographical Breakdown
Majority of the stocks in the
VDE ETF is from the US,
followed by Switzerland,
Netherlands, UK and Canada.
This may be influenced by the
fact that the US have been
doing a lot of oil fracking in
the recent years.
25.67
13.13
7.14
4.073.633.553.02
2.62
2.47
2.28
32.43
Holdings Allocation(%)
EXXON MOBIL CORP
CHEVRON CORP
SCHLUMBERGER LTD
OCCIDENTAL PETROLEUM CORP
CONOCOPHILLIPS
PHILLIPS 66
EOG RESOURCES INC
KINDER MORGAN INC
VALERO ENERGY CORP
98.68
0.42 0.38
0.35
0.06
Geographical Breakdown
U.S.
Switzerland
Netherlands
U.K.
Canada
8. 7
Equity Characteristic
Market Capitalization
Both of them distribute most of
their portfolio in the
undervalued stocks.
Equity sector diversification
Equity Characteristics
ENERGY ETF MSCI US IMI ENERGY 25/50
NUMBER OF STOCKS 144 142
MEDIAN MARKET CAP $43.0 billion $41.7 billion
PRICE/EARNINGS RATIO 46.8x 47.5x
PRICE/BOOK RATIO 1.5x 1.5x
RETURN ON EQUITY 13.1% 12.9%
EARNINGS GROWTH RATE -9.0% -9.0%
TURNOVER RATE 4.20% -
Table 2
As we can see from the equity sector analysis the ETF is dominated by the Oil and Gas sector of the
energy market. From the table we can see the equity characteristics compared with the tracker. We
can see the VDE ETF tracks the underlying benchmark almost perfectly. This fund also has a relatively
high turnover rate which indicates that the fund is active, being frequently bought and sold by fund
managers.
0.20% 40%
1.90%
16.80%
22.80%
10.10%
8.10%
VDE US (29/2/2016)
Coal & Consumable Fuels
Integrated Oil & Gas
Oil & Gas Drilling
Oil & Gas Equipment &
Services
Oil & Gas Exploration
78.5
21.5
Benchmark
US Mid Value Stocks
Canada Stocks
81.8
18.2
VDE
US Mid Value Stocks
Canada Stocks
9. 8
Performance:
VDE’s average return is
positive in the months of
February, March, April
and October. Based on
the average returns, a
cyclic pattern is
observed over the past 3
years.
As the highly volatile of
energy market, the
return is highly volatile
which is suitable for risk-
lovers.
-15
-10
-5
0
5
10
15
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Seasonality
2013 2014 2015 2016 Average
-15
-10
-5
0
5
10
15
02/29/2016
12/31/2015
10/30/2015
08/31/2015
06/30/2015
04/30/2015
02/27/2015
12/31/2014
10/31/2014
08/29/2014
06/30/2014
04/30/2014
02/28/2014
12/31/2013
10/31/2013
08/30/2013
06/28/2013
04/30/2013
02/28/2013
Monthly Return (Periodic)
VDE M5US5ENI
10. 9
Risk Analysis
Macroeconomics Shock
The chart demonstrates possible macro
events that would have an impact on the
fund. A 10% increase in the Euro vs the
Dollar will result in a 1.53% increase in the
P&L of the ETF. The Euro/Dollar exchange
rate broke 1.10 in February 2016, making
a new range of 1.1050-1.1215 against the
dollar. HSBC also forecasted that the Euro
Dollar will call at 1.20 for the year end. It
can therefore be expected that the fund
will experience a positive return due to an
appreciation in the Euro Dollar.
Risk
1. Industry concentration risk:
The chance that there will be overall problems affecting a particular industry. Because
the fund normally invests at least 80% of its assets in one industry, the fund’s
performance largely depends—for better or for worse—on the overall condition of this
industry.
2. Stock market risk:
The chance that stock prices overall will decline. Stock markets tend to move in cycles,
with periods of rising stock prices and periods of falling stock prices. The fund’s target
index may, at times, become focused in stocks of a particular sector, category, or group
of companies. Because the fund seeks to track its target index, the fund may
underperform the overall stock market.
3. Manager risk:
The chance that poor security selection will cause the fund to underperform relevant
benchmarks or other funds with a similar investment objective.
4. Country/regional risk:
The chance that world events—such as political upheaval, financial troubles, or natural
disasters—will adversely affect the value of securities issued by companies in foreign
countries or regions. Because the fund may invest a large portion of its assets in
securities of companies located in any one country or region, its performance may be
hurt disproportionately by the poor performance of its investments in that area.
Country/regional risk is especially high in emerging markets.
5. Currency risk:
The chance that the value of a foreign investment, measured in U.S. dollars, will
decrease because of unfavorable changes in currency exchange rates. Since majority of
the revenue comes from companies in the United States, a fluctuation in the US Dollar
will not have a significant effect on the fund. Hence, this fund will only be affected by the
USDGBP currency fluctuations.
-17%
17%
1.53%
-1.53%
-20% -10% 0% 10% 20%
% Change in P&L
Euro down 10& vs
USD
Euro up 10% vs USD
Equities up 10%
Equities down 10%
11. 10
6. Sector risk:
The chance that significant problems will affect a particular sector, or that returns from
that sector will trail returns from the overall stock market. Daily fluctuations in specific
market sectors are often more extreme or volatile than fluctuations in the overall
market. Because the Fund invests all, or substantially all, of its assets in the energy
sector, the Fund’s performance largely depends—for better or for worse—on the general
condition of that sector. Companies in the energy sector could be affected by, among
other things, geopolitical events, government regulation, economic cycles, and fuel
prices. Sector risk is expected to be high for the Fund.
7. Non-diversification risk:
The chance that the Fund’s performance may be hurt disproportionately by the poor
performance of relatively few stocks or even a single stock. The Fund is considered non-
diversified, which means that it may invest a greater percentage of its assets in the
securities of a small number of issuers as compared with other mutual funds. Because
the Fund tends to invest a relatively high percentage of its assets in its ten largest
holdings, fluctuations in the market value of a single Fund holding could cause significant
changes to the Fund’s share price. Non-diversification risk is expected to be high for the
Fund.
Value at Risk and Absolute Risk
Portfolio Value 3,953,641,472 USD (31/03/2016)
As we can see from the
value at risk table,
there is a huge gap
between one day and
one month at 95% and
99% confidence level
respectively which can
be seen as a risky fund.
Looking at the
absolute risks and
return, we can see that
it track the benchmark
index perfectly but the
downside risk is lower
than the benchmark.
VaR (P&L)
Methodology 95%VaR (1D) 99%VaR(1M)
Monte Carlo Stimulation VaR 122,154,816 914,319,552
Historical 1 Year Simulation VaR 138,653,824 929,372,160
Historical 2 Year Simulation VaR 123,191,984 919,629,696
Historical 3 Year Simulation VaR 104,589,824 879,254,528
Parametric VaR 132,520,024 879,104,256
Absolute Measure – 1 Year VDE MSCI US IMI Energy 25/50
Max Return 8.39 8.37
Min Return -8.58 -8.56
Sharpe ratio -.63 -.61
Downside Risk 16.96 17.13
Periods Up (%) 40.38 40.38
Periods Down (%) 59.62 59.62
VaR (% Return)
Methodology 95%VaR (1D) 99%VaR(1M)
Monte Carlo Stimulation VaR 4.93 23.29
Historical 1 Year Simulation VaR 5.01 23.54
Historical 2 Year Simulation VaR 4.96 23.37
Historical 3 Year Simulation VaR 4.74 22.35
Parametric VaR 4.74 22.43
12. 11
Tracking Indicators
Tracking Indicators VDE vs. M5US5ENI
Total Bull Bear
Alpha 0 0.47 -0.19
Beta 1.01 0.93 0.99
Correlation 0.99 0.97 0.98
Mean Excess Return 0 2.11 -1.67
Information Ratio 0 0.92 -0.85
Jensen Alpha 0.09 7.6 -1.53
R-Squared 0.99 0.95 0.97
Sortino Ratio Vs Index 0 0.26 -0.12
Tracking Error 0.26 0.28 0.24
Table 3
The R-Squared and correlation of 0.99 of the tracking indicator shows that VDE is closely tracking its
benchmark, M5US5ENI. A beta of 1.01 indicates that when the market increases by 1%, VDE will
increase by 1% above its benchmark.
The Alpha shows the overall excess returns of a fund compared to the expected returns of the
market. Here we can see that the alpha of the fund is more likely to expect positive excess returns in
a bull market. In other words, the fund will return the best alpha in the bull market. The information
ratio provides further evidence of the ability of the fund to outperform its benchmark in bull
markets. The figure of 0.92 shows the fund’s manager is consistently able to outperform the
benchmark in a bull market.
Skewness
For the past two years, the skewness is negative for more than half, meaning its return above the
mean positive returns although in the oil bear market. Although the skewness is positive at Feb
2016, from the trend in the past, we can tell that the period won`t last more than six months.
-1.5
-1.3
-1.1
-0.9
-0.7
-0.5
-0.3
-0.1
0.1
0.3
0.5
Feb
14
Apr
14
Jun
14
Aug
14
Oct
14
Dec
14
Feb
15
Apr
15
Jun
15
Aug
15
Oct
15
Dec
15
Feb
16
Skewness
VDESkewness Benchmark skewness
13. 12
Return versus Risk
There is a cross between both the mean
returns and standard deviation in October
2014. Since then, there has been a
divergence between the mean returns and
the standard deviations. However, the gap
between both the mean return and the
standard deviations has started to close
in. This may imply that there is a high
likelihood that mean return and standard
deviation will cross again, this time mean
return being above the standard
deviation.
Although the Sharpe ratio is not doing well
recently, we can tell from the past
performance that it is a good funds.
0
5
10
15
20
25
30
-40
-30
-20
-10
0
10
20
30
40
Feb
14
Apr
14
Jun
14
Aug
14
Oct
14
Dec
14
Feb
15
Apr
15
Jun
15
Aug
15
Oct
15
Dec
15
Feb
16
Mean Return v.s. Standard Deviation of VDE
(Annualized)
VDE mean return Benchmark mean Return
VDE Standard Deviation Benchmark Standard Deviation
-2
-1
0
1
2
3
4
Feb
14
Apr
14
Jun
14
Aug
14
Oct
14
Dec
14
Feb
15
Apr
15
Jun
15
Aug
15
Oct
15
Dec
15
Feb
16
Sharpe ratio
VDE Sortino Ratio v.s. Risk-free rate Benchmark Sortino Ratio v.s Risk-free
VDE Sharpe ratio Benchmark Sharpe ratio
2016 2015 2014
Mean
Return
VDE -20.15 -18.04 13.62
M5US5ENI -19.98 -17.69 13.93
Standard
Deviation
VDE 23.69 25.23 12.13
M5US6ENI 23.89 25.47 11.85
Skewness VDE 0.05 -0.10 -0.18
M5US7ENI 0.05 -0.08 -0.16
Sortino Ratio
Vs Risk-free
VDE -0.90 -0.78 1.20
M5US8ENI -0.89 -0.76 1.28
Sharpe
Ratio
VDE -0.86 -0.77 1.24
M5US9ENI -0.84 -0.74 1.30
14. 13
Technical Analysis
Relative Strength Index
Based on the relative strength index, this ETF was over bought in mid May 2014 and mid June 2014
and has been moving towards the oversold mark which may be a good indicator to buy the ETF. As
of February 2016, VDE US is going in an uptrend, away from the oversold mark, which may be an
indicator that the market is slightly bullish about this ETF.
Bollinger Bands
We can see that VDE has been touching the lower bounds from the start of May 2014 to around
mid-October 2015, reflecting that the fund has been oversold. It has since been relatively volatile,
occasionally dipping to the lower bounds until mid-January 2016. Since then, can see that VDE has
been touching the upper band from mid-February 2016, indicating that the stock has been a popular
buy amongst investors. The exception was around the middle of February when oil prices fell below
$27 per barrel before rising steadily when OPEC stated that they might cut production. Excluding
that dip, VDE has been moving above the moving average and touching the upper bounds. This can
65
75
85
95
105
115
125
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul 2015 Aug
2015
Sep
2015
Oct
2015
Nov
2015
Dec
2015
Jan
2016
Feb
2016
Mar
2016
Bollinger Bands
VDE US Equity - Last Price UBB(2) BollMA (20) LBB(2)
15. 14
indicate that the market is feeling bullish in towards the fund. Since VDE has broken the resistance
levels for the first time since mid-April 2015, we believe that VDE will carry and uptrend in the long
run. It is normal for VDE to converge to the average or lower bounds. In the upcoming short run, we
would like to see VDE to either be a little closer to the lower bound or consistently around the
moving average. Therefore, we recommend waiting for these trends or our limit price of
$74.27/share since VDE is likely to carry an uptrend in the long run.
Volume and Simple Moving Average
The spike in volume on 16th
February 2016 due to the fall in oil price despite the Saudi-Russian deal
to freeze oil output. This caused the Brent crude to fall 3.2% at $32.33 a barrel, while US crude to fall
2% at $29.14 a barrel. The fall in oil prices may have lured more investors to buy the fund at a low
price and hold until the price of the fund increases and sell.
VDE Vs Crude oil, WTI Active Contract
0
1000000
2000000
3000000
4000000
5000000
6000000
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
Oct
2015
Nov
2015
Dec
2015
Jan
2016
Feb
2016
Mar
2016
Volume and Simple MA
VDE US Equity - Volume SMAVG (15)
40
50
60
70
80
90
100
110
120
4-Mar 4-Apr 4-May 4-Jun 4-Jul 4-Aug 4-Sep 4-Oct 4-Nov 4-Dec 4-Jan 4-Feb 4-Mar
VDE vs CLA
VDE US Equity CLA Comdty
16. 15
There is a crossover in October and from then on, VDE and CLA starts to diverge which means that it
is the end of the trend. Since the divergence, VDE US has been outperforming CLA Commodity and
moving towards an uptrend, showing strength in the Fund.
Elliott Wave
Looking at the above technical charts it suggests the ETF could be in a corrective wave. Although
there has been a downward trend from April 2015, however from the start of this year we have seen
a rally in the Vanguard Energy ETF. This could be an indication of a positive correction in the long
term trend of the Energy sector. The price of the Vanguard ETF has increased over the first quarter
of 2016. We can see this through the Elliott Wave chart above. The volume of trading has also
remained consistent from mid-February indicating the trend could stay on this positive trend for a
longer period.
17. 16
Fibonacci Retracement
The Fibonacci Retracement refers to areas of support or resistance, these levels are indicated by the
horizontal lines on the graph. The above chart shows VDE US in its corrective phase pushing through
the 23.6% level. Therefore it should continue to rise until at least the alert zone which is the 38.2%
line.
18. 17
Fund versus Oil Volatility Index
The graph above displays the crossover between the Vanguard ETF and the Oil Volatility Index (OVX). The
OVX measures the markets expectations of 30-day volatility of crude oil prices using the VIX method. The
graph shows an almost negative correlation between the two variables. There is a crossover in November
2015 where the VDE price decreased and the volatility index increased. This gap widened and the start of
2016 as a result of increased volatility in the market. However volatility has decreased significantly in the
past month in favour of VDE. This suggests there will be another crossover suggesting a high likelihood of
an upward trend in the VDE ETF.
Expert View:
Dan Pickering, Chief Investment Officer at Tudor Pickering Holt which specialises in the energy
sector, said on Bloomberg TV that he believes crude prices have already hit the bottom. He suggests
that oil prices are set to climb towards $60-$70 a barrel over the next 18 months.
Conclusion
Since the prices of oil was the lowest at $30.76 a barrel in mid-February, the price of oil has shown
signs of recovery. We can expect a higher price of oil once OPEC freezes the output of oil. Therefore,
it is a good time to buy VDE US as the current price for this fund is low and hold it for a year, then
sell when the price of oil increases, which will inherently stimulate the increase in price of VDE US.
40
60
80
100
120
140
160
180
4-Mar 4-Apr 4-May 4-Jun 4-Jul 4-Aug 4-Sep 4-Oct 4-Nov 4-Dec 4-Jan 4-Feb 4-Mar
VDE vs OVX
VDE US Equity OVX Index