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The price of the Strive U.S. Energy ETF has risen 20% in the last month. The S&P 500 has flat in the same period. The reason may be different from the fact that the fund is based on an anti-ESG philosophy. It may be because its major holdings are in oil companies, the prices of which have had extraordinary run-ups due to record profits.
The Strive U.S. Energy ETF was launched in mid-August. Its two primary holdings were Exxon Mobil at 22% and Chevron at 16% of assets. They have an outsized influence on the Strive U.S. Energy ETF price.
Exxon recently announced the highest quarterly earnings in its history. Exxon is well over 100 years old. The number came to almost $20 billion. The Chevron number was close to a record at just above $11 billion. President Joe Biden looked at the profitability of these companies and objected. He said the income should be shaved to drop oil and gas prices. He commented, “You should not be using your profits to buy back stock or for dividends.” The objections will be ignored unless they are backed up by legislation.
The profits have driven large share price increases. Exxon’s shares are up 19% in the last month. That increase is about the same for Chevron. Over the same period, the price of the S&P 500 is flat.
Strive had a specific reason to launch the U.S. Energy ETF. It says pro-ESG investors have attacked these companies because of their environmental track records. Strive’s position is that this should not be an issue management considers at publicly traded corporations as they operate their businesses to increase profits. Justin Danhof, head of corporate governance at Strive Asset Management, commented, “Strive’s message to U.S. energy companies is simple: do what is best for shareholder value.”
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The rise of the value of the U.S. Energy ETF does not have a clear explanation. Is it because of the stocks it holds or is it because of its approach to investing? Either way, its shareholders have made a killing.
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