Asset allocation model
The world runs on energy. It’s a simple observation that, when accounting for scale, has tremendous implications for investors. Who wouldn’t want a slice of a sector that is valued at a staggering amount – roughly $7 trillion per year? At roughly 10% of the world’s GDP, and with population growth in China, India, the Middle East, and elsewhere expected to account for two-thirds of 30% growth in global energy demand in the coming decades, an already profitable pie is set to grow even more so.The sheer diversity of the sector – oil, nuclear, gas, electricity, solar, wind – means an array of options for investors. Each type of energy is created through variable sets of processes, creating even more investment options. Oil and gas, for example, has some companies who drill for the materials, others that process them, and some that refine them. Some major players even handle all the parts in-house. It’s a massive space with myriad options to explore.Exxon Mobil is one giant of particular appeal to investors, with their size and vertical integration providing protection from the inherent volatility of the oil and gas markets. MPLX specializes in logistics and storage and natural gas gathering and processing while offering investors an attractive price-earnings-growth ratio, while renewable energy purveyors NextEra Energy offer a multibillion-dollar market cap in a growing space.