Bifurcated Energy Sector Performance Presents Opportunity

Year-to-date the energy sector is the worst performing sector in the developed markets. In the tables below, I highlight statistics from our Knowledge Leaders Selection Universe (KLSU) which captures the top 85% of market cap in the developed and emerging markets. The KLSU DM Energy sector is down 9.05% YTD, making it the worst performing sector in the developed world. Breadth has been fairly negative over the last 200 days, with only 43% of energy companies above the moving average. While the defensive utility, telecom and real estate sectors have the worst breadth in the developed markets YTD, energy is the weakest cyclical sector.

KLSU Developed World Sectors (USD)

Interestingly, the KLSU EM Energy sector is not only the best performing sector in the emerging markets, it is also the best performing region/sector in the combined all country world. Its lead is rather significant, outpacing the next closest sector by over 4.5%. It is also the sector with the best breadth in either the developed or emerging markets, with 79% of EM energy stocks above the 200-day moving average.