Energy Stocks as a Separate Portfolio Allocation

ABSTRACT: I examine energy stocks in the context of a diversified investment portfolio. Several factors—the importance of the energy sector, their potential to hedge energy risks, growing interest in real assets, as well as anecdotes of sophisticated investors focusing on energy investments—motivate this look at energy stocks. I demonstrate that a separate allocation to energy stocks enhances portfolio efficiency and hedges against inflation and inflation surprises.

This paper was made available on SSRN as of 19 June 2010.
This paper was presented at the Southwestern Finance Association March 2011 meetings in Houston, an appropriate venue for discussing oil stocks.
The paper was accepted at Journal of Wealth Management on Halloween 2011.
The paper was published in the Spring 2012 issue of the Journal of Wealth Management. The published version is here.

© William W. Jennings 1999-2016