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The US oil price ended up averaging just $39.17 per barrel in 2020, down from $57 in 2019. The oil prices plunged to historic lows, with the US benchmark WTI crude oil futures tumbling into the negative territory in April for the first time in history. The subsequent lock-downs and travel restrictions knocked out approximately 20% of the global fuel demand.

This was followed by the rapid spread of the COVID-19 pandemic from China to other parts of the world. The oil price war between Saudi Arabia and Russia weighed heavily on prices. Why Small Caps?Ģ020 was one of the most challenging periods ever for the energy industry. PSCE has $144 million of assets under management, but with a daily trading volume of 1.2 million shares or $8.3 million (30-day average), the ETF has sufficient liquidity. The fund's drawback, however, is that it is substantially smaller in size than other major energy ETFs, such as the SPDR Energy Select Sector ETF ( XLE), which manage well over $1 billion of assets. PSCE comes with a reasonable expense ratio of 0.29%, meaning the ETF charges $29 each year on every $10,000 of investment. ( EXTN ) with a market cap of $159 million. PSCE has over $100 million of assets under management and holds a total of 33 energy stocks ranging from PDC Energy, its top-holding, valued at $3.8 billion to Exterran Corp. Its top holding is typically the biggest company in PSCE's portfolio in terms of market-cap and gets the greatest share of net assets. PSCE ranks stocks and allocates assets on the basis of adjusted market cap. The small-cap companies are then broadly categorized into 11 sectors, including the energy sector which PSCE follows. The S&P SmallCap 600 Index consists of those small-cap companies which are based in the US, have reported profits on a GAAP basis in their most recent quarter as well as on a trailing-twelve-months basis, and have met certain liquidity requirements. The S&P SmallCap Energy ETF, or PSCE, tracks the performance of the energy stocks present in the S&P SmallCap 600 Index.

The Invesco S&P SmallCap Energy ETF, as the name suggests, gives investors exposure to dozens of small-cap energy companies such as PDC Energy ( PDCE) which produces oil and gas primarily from Colorado's Wattenberg Field, Helmerich & Payne ( HP) which provides drilling rigs to onshore shale oil producers, and PBF Energy ( PBF) which is an oil refiner and a supplier of petroleum products. The Invesco S&P SmallCap Energy ETF could turn out to be one of the best performing energy funds this year and I think investors should keep this on their watch list. The small-cap energy companies, which struggled last year when oil prices crashed, could be the biggest beneficiaries of the strength in the commodity's price. The Invesco S&P SmallCap Energy ETF ( NASDAQ: PSCE) is a rare fund that gives investors access to dozens of small-cap energy companies who are now facing a bright outlook, thanks to the improvement in oil prices.