This Red-Hot Equal Weight Energy ETF Just Hit New Highs

From Zacks: For investors seeking momentum, Guggenheim S&P 500 Equal Weight Energy ETF (NYSE:RYE) is probably on their radar now. The fund just hit a 52-week high, which is up about 63% from its 52-week low price of $36.48/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed.

RYE in Focus

RYE measures the performance of the energy sector of the U.S. equity market. RYE charges investors 40 basis points a year in fees and has top holdings in Chesapeake Energy, Kinder Morgan and Williams Companies (see all energy ETFs here).

Why the Move?

Oil prices recently entered into the bull territory springing higher from its recent low seen early this month. Expected output freeze talks in an informal meeting between OPEC members and other main oil exporters in Algeria next month and reports of falling crude inventories as per the U.S Energy Information Agency’s weekly report boosted oil price lately. This benefited energy stocks and related ETFs like RYE.

More Gains Ahead?

The fund has a positive weighted alpha of 20.52. Since a positive weighted alpha hints at more gains, this surging ETF can be tried a little further.

RYE-2016-08-19

RYE was unchanged in premarket trading Friday at $59.43 per share. RYE has gained 26% since the start of 2016, more than tripling the return of the S&P 500 in the same period.

This article is brought to you courtesy of Zacks Research.