Investors often seek to geographically diversify their energy investments and this makes sense in light of the current commodity prices. Brent oil is fetching a premium to WTI and natural gas is easily trading at a double per mcf all over the world compared to North America. Luckily, there are a host of global energy ETF products that provide you with the exposure you are seeking.
IXC – iShares S&P Global Energy ETF (NYSE: IXC)
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IXC seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of companies that Standard & Poor’s deems part of the energy sector of the economy and important to global markets, as represented by the S&P Global Energy Sector Index. This is by far the best oil stock ETF by assets, fees and liquidity amongst its peers. It has also outperformed its peers so far this year. It was first introduced in 2001 and has become popular with investors and traders alike. The dividend yield on this ETF is certainly a plus. The fund holds many heavyweight names in the energy sector such as Exxon Mobil, Chevron, BP, TOTAL and Royal Dutch Shell, Schlumberger, ConocoPhillips and Occidental Petroleum amongst others.
Live ONE YEAR Chart of the iShares S&P Global Energy ETF– Symbol IXC
IOIL – Global Crude Oil Small Cap Equity ETF (NYSE: IOIL)
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IOIL is a diversified Oil Stock ETF that includes global small cap companies engaged primarily in the oil sector, including exploration & production, refining & marketing, and equipment, services & drilling. With 1 trade, you get access to a multitude of global oil small cap companies. The fund’s country allocation covers 14 countries including both developed and emerging. IOIL Oil Stock ETF does not pay any dividends and has been trading since May 5, 2011. While the management expense fee is the highest amongst its peers it boasts only a fraction of IXC’s assets and trading volume.
XOIL – Global X Oil Equities ETF (NYSE: XOIL)
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XOIL seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Oil Equities Index. The index tracks the performance of 25 equal-weighted exploration and production companies globally that have shown a high correlation to the spot price of oil. The fund’s current country allocation is divided between the US (~80%) and Canada (~20%). XOIL Oil Stock ETF does not pay any dividends and has been trading since March 14, 201. This ETF suffers from the same lack of liquidity as IOIL and its assets are dwarfed by IXC.
IPW – SPDR S&P International Energy Sector ETF (NYSE: IPW)
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IPW is another international energy ETF that seeks to provide investment results that correspond generally to the total return performance of an index (BMI Energy Sector index) that tracks the energy sector of developed global markets outside the United States. This fund started trading on July 16, 2008 and pays a dividend like IXC. The top 10 holdings account for more than 50% of the fund and they are: BP, Total, Royal Dutch Shell, BG Group, ENI, Suncor Energy, Canadian Natural Resources, Transcanada Corp. and Cenovus Energy. They are all large well respected names in the energy sector. The fund was first introduced on July 16, 2008 so compared to IXC it has a fraction of its assets and a lower trading volume similar to its peers from above.
Let’s see how all 4 Energy ETFs compare by looking at the chart from the beginning of the year:
The verdict is clear when it comes to global energy ETFs, IXC outperforms them all hands down on all levels. Remember that on top of risks specific to the oil and gas sector, there are foreign securities and currency risk when investing in ETFs holding foreign securities.
Finally, geographic diversification can also be achieved by adding a renewable energy ETF where you add equities of companies operating all over the word related to alternative energy in multiple industries.
Disclaimer: The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell any security. Trading involves substantial risk and may not be right for everyone.