Here are three ETFs that can add value to your portfolio this year

Exchange-traded funds (ETFs) are a great investment option that can create wealth if chosen wisely. They are relatively less risky and allow investors to diversify their portfolios in a convenient manner. Exchange-traded funds can be traded just like stocks, but it is very important to invest in the ones that suit you best.

The tension in Eastern Europe and the emergence of new coronavirus variants triggered a stock market crash that has cost investors millions of dollars. However, energy stocks have remained largely unaffected due to rising oil prices, which is having a positive effect on energy ETFs also and the trend is expected to continue. Here’s a look at some of the promising ETFs with the potential to bring good returns.

iShares Global Energy ETF (IXC)

With a market cap of around $1.6 billion, iShares Global Energy ETF has its assets spread across all key geographical regions, with the U.S. accounting for more than 50% of it. Generally, its holdings are influenced by fluctuations in oil and gas prices. The diversified portfolio positions IXC to take advantage of the positive global energy trends.

Having grown in double digits so far this year, iShares is expected to stay strong in the near future leveraging the elevated oil prices. While the current uptick in energy prices is having a positive effect on IXC’s performance, it could vary depending on the economic health of the countries where it has presence.

First Trust Natural Gas ETF (FCG)

Like IXC, First Trust Natural Gas ETF (FCG) has significant holdings in the oil and natural gas industry, with the top 10 holdings accounting for more than 40% of its total assets under management.

Since the allocation is almost fully in the energy sector, it provides impressive asset class return and momentum. Being a passively managed entity, First Trust’s expense ratios are lower compared to active ETFs. It also offers higher transparency and greater tax efficiency.

Since oil & natural gas is a top-ranked industry, First Trust’s holdings in diverse segments of that business make it an option that suits long-term investors. The 12-month trailing dividend yield is pretty decent. FCG has gained about 20% since the beginning of the year.

Invesco Dynamic Energy Exploration & Production ETF (PXE)

What makes Investco a good bet is its holdings in energy stocks that have experienced minimum volatility in the past twelve months. Based on the Dynamic Energy Exploration & Production Intellidex Index, it has extensive exposure to the energy exploration segment of the market. The portfolio is designed in such a way that the impact of market volatilities would be relatively low on PXE.

Invesco is also exposed to the consumable fuels segment, which has remained resilient to the pandemic. It had a good start to the year and has maintained the uptrend so far.

Meanwhile, sector-specific ETFs are prone to high volatility compared to those linked to popular stock indexes like S&P 500. However, no investment is immune to market uncertainties, and fluctuations in a particular sector can affect investments linked to that area. Contrary to popular belief, ETFs are not always safer than stocks.