EXCLUSIVE: WisdomTree Exec Predicts Energy Prices Will Create 'Notable Set-Up For Large Cap Value Relative To Growth'

As Brent crude and gasoline prices rise, WisdomTree Inc WT Head Of Equity Strategy Jeff Weniger is calling it: “A notable set-up for large-cap value relative to Growth” is taking shape.

What Happened: Since September, Brent crude has shot up by 12 points. And gasoline prices remained relatively flat year-over-year. Weniger now sees the rise in energy prices as a game-changer for the market.

Investors should shift focus toward large-cap value stocks — particularly those with exposure to the energy sector, he says.

“If investors are of the view that crude oil will keep running, this could create a notable set-up for Large Cap Value relative to Growth,” Weniger told Benzinga in an exclusive interview.

For investors seeking exposure, there are four popular large-cap value equity ETFs in the U.S. to consider:

• Vanguard Value ETF VTV
• Capital Group Dividend Value ETF CGDV,
• iShares Core High Dividend ETF HDV
• WisdomTree U.S. High Dividend Fund DHS

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Energy Prices, Sectors, Impact On Growth

The S&P 500 Value Index (SVX), with 6% of its weight in the energy sector, is in a prime position to benefit from rising oil prices. In contrast, the S&P 500 Growth index, with just 1% exposure to energy, could face headwinds.

“If the consumer does take a hit from some forthcoming rise in gasoline prices, that could be another headwind for the S&P 500 Growth index,” Weniger adds.

The Vanguard S&P 500 Growth ETF VOOG tracks the performance of companies in the S&P 500 Growth Index, just as the iShares S&P 500 Value ETF IVE tracks the performance of companies in the S&P 500 Value Index.

With the consumer spending more at the pump, the S&P 500 Growth index—heavily weighted (16%) in Consumer Discretionary—could feel the pinch, while the Value index, with just 5% in the same sector, remains less exposed.

The game plan? Look to Large Cap Value stocks with energy exposure as an effective hedge against rising gas prices.

Investors Should Take Note

For those expecting oil to continue its upward trajectory, Weniger’s advice is clear: “Large Cap Value relative to Growth” could be the play to make in the coming months.

As gasoline prices climb, those invested in energy-heavy Value stocks may find themselves ahead of the curve.

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