Equity Energy ETFs: Products For Every Taste!
Last week we discussed the best ETFs for investors looking to profit from price movements in energy commodities. We looked at top products like the US Oil Fund $USO, Powershares DB Oil Fund $DBO, and US Natural Gas Fund $UNG.
We also covered ETNs, like the S&P GSCI Crude Oil Total Return $OIL.
Without question, the products listed in that article are the easiest way for the average investor to profit off movements in energy commodities. You don’t need a futures account, and ETFs trade just like a stock.
But as you’re likely aware, there’s another aspect to the energy markets…
There are thousands of small-, mid-, and large- cap companies involved in the production of energy commodities. And when commodity prices fluctuate, it can have a big effect on the share price of these companies.
That’s why it’s essential you understand your options when it comes to equity-based oil and gas ETFs…
Equity ETFs offer investors are great way to profit from industry trends in various energy markets. Today we’re going to look at what I feel are the best equity oil and gas focused ETFs the market has to offer.
Let’s get to it!
Your Go-To Equity Energy ETF List!
Much like our commodity list, to be included in today’s best equity oil and gas ETF list, a product must meet a strict criterion:
- An expense ratio less than or equal to 0.90%.
- Sufficient intraday liquidity, which makes opening/closing a trade easier.
Keep in mind, there are no leveraged ETN products in today’s list. We’ll discuss those exciting offerings in an upcoming article.
Without further ado, here are the best equity oil and gas ETF/ETNs the market has to offer…
Energy Select Sector SPDR $XLE – This is arguably the top dog of equity energy ETFs. Backed by State Street SPDR, $XLE holds 44 oil and gas companies, of which 80% are mega- and large-cap names. If you’re looking for a diversified way to invest in the world’s top energy companies, this is it.
Vanguard Energy Vipers $VDE – This ETF gives investors diversified exposure to the integrated oil and gas, oil equipment and services, exploration and production, refining, and oil and gas transportation & storage industries. $VDE has 164 holdings, so it’s a bit more diversified than $XLE.
SPDR S&P Oil and Gas Exploration & Production $XOP – Here’s another great offering from State Street SPDR. $XOP is focused towards oil and gas drilling and exploration companies- 82 of them to be exact. What’s more, the ETF is weighted heavily in small- and mid-cap companies. If you’re looking for a little higher risk, and possibly more reward, this is the way to go.
iShares US Energy ETF $IYE – Here’s another solid ETF geared toward the mega- and large-cap energy companies in the business of finding, refining, and marketing crude oil and natural gas. $IYE holds 94 companies in its portfolio.
Market Vectors Oil Services $OIH – This ETF is focused on a particular sub-industry of energy production- oil services. $OIH holds 25 companies that provide much of the equipment and expertise to drill miles below the earth’s surface in search of oil and natural gas.
iShares Global Energy $IXC – This oil and gas equity ETF has a global reach.
In fact, just 59% of this ETF’s holdings are based in the US. The rest of the 98 companies held in $IXC come from places like the UK, Canada, France, China, Norway, and Brazil.
iShares US Oil and Gas Exploration & Production $IEO – Here’s another exploration focused offering. Much like $XOP, this ETF focuses on 77 small- and mid-cap US companies exploring for oil and natural gas.
iShares US Oil and Gas Equipment and Services $IEZ – Similar to $OIH, this ETF is geared toward the oil services industry. However, $IEZ currently holds twice as many companies in its portfolio- 52.
ISE-Revere Natural Gas Index Fund $FCG – Unlike all the offerings above, this ETF is geared toward producers that are natural gas focused. As a result, $FCG is very sensitive to price movements in the natural gas market.
S&P Small-cap Energy Portfolio $PSCE – As the name suggests, this offering is made up entirely of small- and micro-cap oil and gas producers. It goes without saying that this ETF is not for the faint of heart due to its exposure to riskier small-cap companies. However, $PSCE is still worth a close look since it offers a diversified approach to quickly growing oil and gas names.
Dynamic Oil Services $PXJ – Here’s an oil services focused offering from Invesco. Much like $IEZ and $OIH, this ETF holds companies in the business of helping producers bring oil from far beneath the earth’s surface.
Market Vectors Coal $KOL – As you likely guessed, this ETF tracks the coal industry. While I’m not too excited about the future of the coal industry, there are many analysts that feel the industry is oversold relative to the amount of energy it provides.
There you have it…
What you see above are the top equity energy ETFs the market has to offer. They have a low expense ratio and ample liquidity to execute your trades at a fair price.
As you may have noticed, the list above does not include products that focus on forms of clean energy production, such as solar, wind, and hydroelectric power. While I’m certainly excited about the future of clean energy, it’s beyond the scope of this article.
If you’re looking for ETFs that track the oil and gas pipeline industry, be sure to check out this article.
Until Next Time,
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at http://commoditytradingresearch.com/free-sign-up.
Category: Commodity ETFs