Is an Oil & Gas ETF or a Solar Stock Fund the Better Buy in 2026?
The article compares two ETFs, State Street's XLE and Invesco's TAN, which focus on oil and gas and solar energy respectively. XLE tracks traditional fossil fuel giants, while TAN targets the solar supply chain. The article helps investors decide which fund is the better …
Intelligence analysis by Llama
The article compares two ETFs, XLE and TAN, which focus on oil and gas and solar energy respectively. XLE tracks traditional fossil fuel giants, while TAN targets the solar supply chain.
Imagine you're deciding between two different types of energy: oil and gas, or solar power. The article helps you figure out which one is a better investment. It compares two special kinds of investments called ETFs, which track either oil and gas or solar power. The article says that solar power is getting cheaper and might be the better choice for the future, but oil and gas are still making a lot of money right now.
Analysis
A $60B Vote of Confidence
The article compares two ETFs, State Street's XLE and Invesco's TAN, which focus on oil and gas and solar energy respectively. XLE tracks traditional fossil fuel giants, while TAN targets the solar supply chain. This comparison helps investors determine if they prefer broad energy stability or niche renewable growth potential.
Why Cursor?
In some ways, deciding between these funds is a decision about whether you believe renewable energy will continue to grow in importance or if fossil fuels in the U.S. will continue to dominate. Solar is now the cheapest way to produce electricity on a utility scale, according to the investment bank Lazard. But U.S. oil and gas stocks benefit from the rise in global prices from the Iran war, meaning they should be able to bring in more net income due to elevated prices at the gas pumps.
The Road Ahead
Performance-wise, TAN bests XLE in the 10-year time frame, returning an annualized 11.8% compared to 8.9% for XLE. But in the 3- and 5-year look-backs, TAN has lost money, reflecting the volatility in the global solar market brought on by rising interest rates (which affect the viability of financing large solar farms). TAN has lost 5.9% and 7.9% over the past three and five years, respectively. XLE, meanwhile, returned 13% and 18.9% over its past three and five years. With solar on an irreversible long-term uptrend, in terms of global share of energy production, TAN is the choice for long-term investors who can ride out short-term bumps in the road over interest rates, tariffs, and federal government policy favoring fossil fuels.
Key points
- XLE tracks traditional fossil fuel giants, while TAN targets the solar supply chain.
- TAN has lost money in the short term due to rising interest rates and volatility in the solar market.
- XLE has returned 13% and 18.9% over its past three and five years, respectively.
- TAN is the choice for long-term investors who can ride out short-term bumps in the road over interest rates, tariffs, and federal government policy favoring fossil fuels.
If the article's predictions are correct, solar power could become the dominant source of energy in the future, leading to a surge in demand for solar-related stocks and potentially high returns for investors who bet on TAN.
However, the article also notes that TAN has lost money in the short term due to rising interest rates and volatility in the solar market, which could be a risk for investors who choose to invest in TAN.
