Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

These Energy ETFs Are Creeping Higher


Fortunately for investors, the roster of energy ETFs that have been quietly creeping higher in recent weeks does not begin and end with the Energy Select Sector SPDR.

iShares Dow Jones US Oil & Gas Exploration & Production Index Fund (NYSEARCA:IEO)

The iShares Dow Jones US Oil & Gas Exploration & Production Index Fund is a valid play for those looking to avoid excessive exposure to integrated oil names. Occidental Petroleum (NYSE:OXY) is the ETF's largest holding with an allocation of almost 14.5%, but IEO's 60 other holdings are tilted heavily toward independent exploration and production firms and refiners.

One thing to note about this ETF: Its top-five holdings – Occidental, Anadarko Petroleum (NYSE:APC), EOG Resources (NYSE:EOG), Phillips 66 (NYSE:PSX), and Apache (NYSE:APA) – combine for 47% of the fund's weight. In other words, five stocks are the real drivers of IEO's performance.

That has not been a problem over the past month as IEO has gained about 3.2%, but IEO is not for the faint of heart. The ETF carries a beta of 1.71 against the S&P 500, according to iShares data.


By far the smallest and least traded ETF on this list, OGEM merits consideration for the investor that is not shy about embracing state-controlled energy firms, of which there are plenty in the developing world. Many of those companies are found in Russia and China. To that end, it is not surprising that Russia and China combine for 52% of OGEM's country weight.

Regarding OGEM's Russia exposure, it may not be as concerning as some might think. The ETF's index already features a dividend yield of 3.3%. However, Russia is forcing its highly profitable, cash-rich state-controlled companies to devote larger percentages of their profits to dividends.

Of course, that move is self-serving in favor of the government, but it benefits other shareholders as well. Additionally, emerging markets energy names are inexpensive relative to their developed market counterparts. IEO carries a P/E ratio of just over 22. OGEM's is just half that. The ETF is up 3.33% in the past month.

Below, find some more great ETF and market content from Benzinga:

Can Pokemon X and Y Save Nintendo 3DS?

Tiffany's Falls Despite Surging China

Three Stocks That Could Benefit From Obamacare

Twitter: @Benzinga

Benzinga Pro covers this and all market news in real time. Get your free trial here.

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos