Energy is by far the top-performing S&P 500 group this year after registering a gain of more than 45%, but the sector remains unloved by investors, according to a new report from Bank of America.
The firm found that the entire energy sector makes up just 2% of the average long-only portfolio manager’s holdings. This is less than half the weight of the average fund’s exposure to Facebook, which stands at 4.2%.
If the sector keeps moving higher, funds with little to no exposure may suffer below-market returns.
“Not owning Energy wasn’t painful when the sector was <2% of the S&P 500. But the astronomic 92% price return since October has bumped Energy’s weight to 3%; another big move in oil may be felt more acutely,” the firm said in a note to clients Thursday.
