▪ Market Vectors Oil Services ETF (OIH) – With $1.6 billion in total assets and a 0.35% expense ratio, the ETF invests in the 25 largest U.S.-listed, publicly traded oil services companies such as Halliburton Co.
▪ Market Vectors Global Coal ETF (KOL) – With $179 million in total assets and a 0.59% expense ratio, the ETF invests in companies within the coal industry, including names such as Joy Global Inc. and Consol Energy Inc.
▪ First Trust ISE-Revere Natural Gas Index ETF (FCG) – With $488 million in total assets and a 0.60% expense ratio, the ETF invests in natural gas stocks, including Noble Energy and Goodrich Petroleum Corp.
Going Global
Investors in the energy sector may also want to diversify their exposure around the world, instead of focusing exclusively on the United States. While energy is largely a global commodity, U.S.-based firms can be affected by a number of domestic-only issues, including increased governmental regulation, tariffs, or other risk factors. Diversifying internationally can help allay many of these concerns and improve risk-adjusted returns across the board.
Some popular global energy ETFs include:
▪ iShares S&P Global Energy Sector ETF (IXC) – With $982 million in total assets and a 0.48% expense ratio, the ETF invests in energy companies around the world with only about 50% weighting in the U.S. and about 15% exposure to Exxon Mobil.
▪ SPDR S&P International Energy Sector ETF (IPW) – With $13 million in total assets and a 0.50% expense ratio, the ETF invests in non-U.S. energy companies, including BP plc, where it holds about 11% of its total value.
The Bottom Line
Investors have many options when it comes to investing in energy ETFs. By being mindful of weightings and expense ratios, investors can avoid unexpected problems, while considering alternative sub-sectors and international companies can help improve diversification.