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While the stock market has boomed, energy stocks have not. Indeed, they have been the worst-performing sector over the last decade. Moreover, energy has dropped from 15% in 1990 to only 5% of the S&P 500 sector weightings in 2019. This is particularly ironic, since U.S. oil and gas production has boomed over the same period, making the United States the world’s largest producer of oil and gas — and making the country virtually self-sufficient.
Why the retreat from the energy sector? Is it because of poor economic performance by companies themselves, compared to the overall market and other sectors, such as Big Tech? After all, this 10-year period encompasses the 2014–2016 oil price collapse. Or is it because of the growing impact and scale of ESG (environmental, social and governance) investing?
To answer the “why,” IHS Markit Corporate Solutions’ Investment Perception group recently completed in-depth interviews with institutional and private…