Energy ETF's 13.9% Pullback Historically Precedes 20% Median One-Year Gain
XLE•The energy sector ETF has fallen 13.9% from its 52-week high, marking one of 24 similar pulls since 2005, 19 of which produced positive one-year returns with a median gain of 20%. Investors endured an additional 7% drawdown before recovery, and the fund’s top five holdings represent 55% of assets.
1. Historical Dip Performance
Since 2005 the energy ETF has experienced 24 declines of at least its current 13.9%, with 19 of those instances delivering a positive return over the following year. Recovery outcomes ranged from a one-year loss of 31% to a gain of 61%, illustrating varied volatility.
2. Recovery Time and Returns
When the fund did rebound, the median one-year return was 20% and the median interim peak gain reached 24%, achieved in about 289 days. These metrics suggest significant but not immediate gains for patient investors.
3. Interim Drawdown Risk
Investors buying during past dips faced a median additional drawdown of 7% before the fund reversed course. This extra decline highlights the potential for further short-term losses even after entering a pullback.
4. Portfolio Concentration
The ETF holds 21 positions, with its five largest names accounting for 55% of assets and its top ten representing 75.2%. Heavy exposure to major energy companies like Exxon Mobil and Chevron drives both steep drawdowns and strong rebounds.
