Energy Market Shift: From Crude Oil to Power Infrastructure ETFs

The Evolving Energy Market

• 💡 Investors are shifting their focus in the energy market, moving away from traditional crude oil and natural gas ETFs towards energy infrastructure.
• 📉 The largest energy ETF, XLE, has seen significant net outflows, totaling over $7 billion year-to-date and $13 billion over three years.

Rise of Energy Infrastructure

• 📈 In contrast, energy infrastructure as a category, including MLP ETFs like AMLP, has experienced net inflows of $1.66 billion year-to-date.
• 💰 AMLP itself has seen $950 million in net inflows in 2025, indicating growing investor interest in this segment.
• ⚡ This shift reflects a broader trend of viewing energy through the lens of "power" rather than just raw commodities.

Electrification and Future Demand

• 🔌 The energy conversation is evolving to include exposure to rising electricity demand, driven by themes like electrification.
• ⚛️ There's a growing incorporation of nuclear power, alongside natural gas (now at 42% of generation) and renewables like solar and wind.
• 📊 The utility sector, once considered "sleepy," has become a strong performer, with XLU seeing $2.7 billion in net inflows year-to-date.

AI's Impact on Power Demand

• 🤖 Projected AI power demand is a significant factor driving the need for increased electricity generation.
• ⚡ The US, in particular, needs to increase electricity production by approximately 45% by 2040 to meet this rising demand.
• 🔌 ETFs like Global X's ZAP are emerging to provide investment vehicles focused on the electrification theme, particularly within the US market.