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Putting Oil in your Stocks
By Simon Maierhofer, Co-Founder
05-14-2008
In our previous article we addressed how to take advantage of high oil and gas prices with commodity based ETFs and ETNs. In this article we will focus on equity based oil ETFs.
What is the difference between the two? Commodity ETFs are directly linked to the price of the underlying commodity, in this case oil contracts. Depending on the ETF this could be sweet, light crude oil, brent crude oil, heating oil, or a similar variation. Oil equity ETFs on the other hand invest in companies within the oil sector (i.e. Exxon Mobile. Chevron).
Since the price of oil has doubled over the past two years, oil linked commodity ETFs have outperformed almost all oil equity ETFs. The United States Oil Fund (Ticker: USO) is up 32.14 percent so far this year.
During in periods of more stable oil prices you’ll find that equity oil ETFs can provide respectable upside potential and/or downside protection. Instead of worrying about price fluctuations of crude, you can focus on specific sub-sectors (i.e. oil exploration) and benefit from the collective hand of corporate managers.
Oil Sector ETFs:
|
Name
|
Ticker
|
Exp.
|
YTD %
|
|
Energy Select Sector SPDRs
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XLE
|
0.23%
|
6.52
|
|
First Trust Energy AlphaDEX
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FXN
|
0.70%
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16.91
|
|
iShares DJ U.S. Energy Sector
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IYE
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0.74%
|
6.78
|
|
iShares DJ U.S. Oil & Gas Expl. & Prod.
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IEO
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0.48%
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19.49
|
|
iShares S&P Global Energy Sector
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IXC
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0.48%
|
6.43
|
|
iShares S&P NA Natural Resources
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IGE
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0.48%
|
9.30
|
|
PowerShares Dynamic Energy Sector
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PXI
|
0.60%
|
14.01
|
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PowerShares Energy Expl. & Prod
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PXE
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0.60%
|
11.39
|
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PowerShares FTSE RAFI Energy Sector
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PRFE
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0.60%
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3.17
|
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PowerShares Oil & Gas Services
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PXJ
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0.60%
|
11.02
|
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Rydex S&P Equal Weight Energy
|
RYE
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0.50%
|
10.17
|
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SPDRs S&P Oil & Gas Equipment & Services
|
XES
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0.35%
|
14.50
|
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SPDRs S&P Oil & Gas Exploration & Production
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XOP
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0.35%
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20.46
|
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Vanguard Energy ETF
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VDE
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0.22%
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7.84
|
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WisdomTree International Energy Sector
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DKA
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0.58%
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10.93
|
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Oil Services HOLDRS
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OIH
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n/a
|
7.11
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ProShares UltraShort Oil & Gas
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DUG
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0.95%
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-16.79
| Data as of
05-12-08
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