Best oil etf: 4 Best Oil ETFs for 2023

But OILK isn’t designed to perform in line with the WTI crude oil prices. Instead, this fund’s performance is based on the rolling of WTI crude oil futures contracts. OIL is structured as an exchange-traded note , which is an unsecured debt security that trades like a stock. OIL targets the Barclays WTI Crude Oil Pure Beta TR Index. The benchmark mirrors the returns through an unleveraged investment in futures contracts in the crude oil market. The Index may combine several contracts with different expiration dates.

Oil prices fell nearly 2% on Thursday, extending the previous session’s 3% drop, to trade a… To help investors keep up with the markets, we present our ETF Scorecard. As you can see, each oil ETF has its own pros and cons, allowing you to choose an aggressive or conservative approach to oil investment. This makes the SPDR S&P Oil & Gas Equipment & Services ETF a less risky option when compared to other oil ETFs on the market. Oil and gasoline companies have taken steps to make oil burning as “clean” as possible. From fuel stabilizers to ethanol-free gasoline that limits emissions, technology has made oil more sustainable than ever .

The oil industry is a challenging one for investors because of its volatility and other risk factors. Investors will want to consider having some exposure to the oil market in their portfolio. The Alerian MLP ETF is a fund that allows investors to target energy infrastructure midstream master limited partnerships . These companies make money by providing midstream services such as operating pipelines or liquefied natural gas export facilities. Meanwhile, individual oil companies face their own set of issues.

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The first follows a monthly roll schedule while the second and third hold June through December contracts, which are rolled every March and September, respectively. The fund’s oil futures exposure is based on a wholly-owned subsidiary in the Cayman Islands, a move that has become fairly common among commodities. OILK weighs all three contract maturities equally and balances its holdings semi-annually. Subsequent changes allowed it a little more flexibility to invest in longer-dated contracts. Oil ETFs are baskets of securities that track the price of oil as a commodity, or contain oil stocks. They are an easy way to invest in oil markets, but they do carry risk.

Oil ETFs make getting into the sector easy by allowing investors to potentially profit from the sector’s upside through either holding a basket of oil stocks or an ETF focused on crude prices. There are several top oil stock ETFs, giving investors many easy ways to add some oil market exposure to their portfolios. The fund uses a market weight strategy, so it’s highly concentrated at the top, with two of the world’s largest integrated energy companies by market cap making up more than 40% of the fund’s total holdings.

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ETF Holdings

Again, most energy stocks move along with oil and gas prices, so RYE’s performance is often similar to XLE’s. Still, if you want to rest easy knowing you’re not carrying any excess single-stock risk, this Invesco fund will do the trick. Concentration risk is a serious concern for many ETFs – if one or two stocks account for so much of the portfolio, how much diversification are you really getting, after all? But that’s admittedly less of a concern in energy, where most stocks ebb and flow based on the underlying commodity prices. In fact, you could argue that the heavy allocations to Exxon and Chevron act as ballast because parts of these integrated majors’ businesses can still profit even when oil prices aren’t rising.

The stocks might move up or down over the next three months, but regardless of how big or small they’ve gotten, RYE will simply rebalance them at the same weight come the following quarter. The lower the average expense ratio for all U.S.-listed ETFs in a commodity, the higher the rank. In fact, 6% of its holdings are in Renewable Energy Group.

Adding to the industry’s difficulties is the capital-intensive nature of oil production. It costs lots of money to drill and complete wells to maintain and increase production rates. Oil companies need to reinvest a significant portion of their cash flows to sustain their output, which can be more challenging when prices fall. The following oil ETFs are commodities ETFs, meaning they track the price of oil through benchmarks such as the Brent Crude Oil or West Texas Intermediate benchmarks. Green energy and traditional energy often move in different directions, and indeed, ICLN ended 2022 down 5.4% while oil and gas were off to the races.

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The fees eat into the income the fund’s holdings produce. However, the cost can be worth it because it lets investors own a basket of income-producing energy companies with a single investment. Skyrocketing oil prices became a major concern for consumers when an upward trend began in early 2022, as the COVID-19 pandemic began winding down. Russia’s invasion of Ukraine only made matters worse, sending oil prices soaring and leading to supply concerns that have hurt American consumers at the gas pump.

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A long-running debate in asset allocation circles is how much of a portfolio an investor should… It includes all types of ETFs, including commodity ETFs. Database’s Country Exposure tool allows investors to identify equity ETFs that offer exposure to a specified country. You can find Benzinga’s recommended oil ETFs on the list above. The United States Oil Fund is an inexpensive ETF that tracks the price of West Texas Intermediate Light Sweet Crude Oil. The VanEck Vectors Oil Services ETF focuses entirely on the oil industry of the United States by tracking the MVIS U.S. Listed Oil Services 25 Index.

Crude Oil ETF List

The oil industry can be extremely challenging for investors. Oil prices are notoriously volatile, often quickly changing on any whiff of imbalance between supply and demand. The cyclical nature of the oil market is a big driver of volatility, with demand ebbing and flowing with the global economy.

Shares of the VanEck Vectors Oil Services ETF are suitable complements for both short- and long-term investors but should be balanced out with shares of a total market index fund to limit risk. OIL’s sole holding is futures contracts of WTI sweet light crude oil. The ETF is heavily exposed to futures contracts that expire in one year, which reduces the short-term risks of contango. The top holdings of the first of these ETFs are futures contracts for Brent Crude oil, and the biggest holdings for the second and third are futures contracts for West Texas Intermediate sweet light crude oil. United States Brent Oil Fund, iPath Pure Beta Crude Oil ETN, and United States Oil Fund LP are top-performing funds tracking oil futures contracts.

Get advice on achieving your financial goals and stay up to date on the day’s top financial stories. Joshua Rodriguez is a personal finance and investing writer with more than 10 years of experience. News & World Report, Money Talks News and several other mainstream outlets. Rising home values can quickly transition a reasonable housing market into the type of real estate monster that has consumed places like the San Francisco Bay Area and New York City. Newsletter, which covers both news and analysis about spending, saving, investing, the economy and more. These types of companies typically feature much higher yields than exploration-and-production, refinery and distribution companies – evident in AMLP’s juicy 7%-plus yield.

Despite the rise of renewable energy research, the demand for oil continues to grow. Experts predict that daily demand for oil will exceed over 100 million barrels worldwide. That’s about 15 million barrels greater than just 10 years ago. Brent blend is a type of sweet crude oil that is used as a benchmark for the prices of other crude oils.

Data is solely for informational purposes and not for trading purposes or advice. This list excludes hedged, leveraged and inverse ETFs. We believe everyone should be able to make financial decisions with confidence.