Oil ETF Features and Types of Oil ETF with Examples

The U.S. Oil Fund is an exchange-traded security that provides investors with more direct exposure to oil prices. This approach allows investors to make a directional bet on the price of oil without having to engage in futures trading or risk that an oil stock investment will underperform the price of crude oil. The United States 12 Month Oil Fund LP closely tracks the spot price of light, sweet crude using an average of the 12 nearest-month NYMEX WTI crude oil futures contracts. Spreading the contracts out over 12 months reduces the fund’s sensitivity to short-term fluctuations in spot oil prices.

The links in the table below will guide you to various analytical resources for the relevant ETF, including an X-ray of holdings, official fund fact sheet, or objective analyst report. While it’s a more direct play on oil prices, it still won’t perfectly track WTI, and you won’t receive dividend income like you will with so many of the other energy ETFs on this list. It’s worth noting that in both the short- and long-term alike, U.S.-based https://forexbox.info/ energy stocks have outperformed their international peers. But if you’re looking to defray a little geographic risk, this is one of the best energy ETFs to do so while still printing a nice profit from higher global commodity prices. Oil & Gas Exploration & Production ETF offers great exposure to the domestic oil market. The Vanguard Energy ETF is a passively managed fund that tracks the MSCI US IMI Energy 25/50 index.

ProShares K-1 Free Crude Oil Strategy ETF (OILK)

The United States Oil Fund (USO) is one of the most direct ways investors can gain exposure to oil as a natural resource. The goal of the ETF is to track the daily change, in percentage terms, of the spot price of light sweet crude oil. Oil ETFs seek to replicate the price movement of an oil benchmark, such as the WTI or Brent crude. Many oil ETFs utilize futures contracts, so shareholders of these ETFs do not take possession of the physical asset. Investors should keep in mind that the price of oil can significantly fluctuate in the short term.

Although fossil fuels have grown controversial in recent years, there’s little sign that the world will stop using oil in the near future. Supply cuts by the Organization of Petroleum Exporting Countries (OPEC) have pushed oil prices… ETF issuers are ranked based on their AUM-weighted average dividend yield of their ETFs with exposure to Crude Oil. ETF issuers are ranked based on their aggregate assets under management (AUM) of their ETFs with exposure to Crude Oil. The fund’s fact sheet recommends that investors buying or selling USL should consider using limit orders, where you specify the maximum price to pay or the minimum price to sell, to manage spreads.

Investors may acquire ETFs and tender them for redemption through the Fund in Creation Unit Aggregations only. Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes.

United States Oil Fund LP

But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. With oil demand expected to increase in the near future, these ETFs are a way for investors to profit from increased demand for fuel due to increased travel and production of goods after the pandemic.

• While the odds are against energy repeating as the S&P leader this year, there is reason to believe energy funds still have more gas in the tank.
• As with all stocks, you may be required to deposit more money or securities into your margin account if the equity, including the amount attributable to your ETF shares, declines.
• Get advice on achieving your financial goals and stay up to date on the day’s top financial stories.
• For more detailed holdings information for any ETF, click on the link in the right column.
• MSCI has established an information barrier between equity index research and certain Information.
• Some of the fund’s largest holdings are in the ProPetro Holding Corporation, the Keane Group Inc. and RPC Inc.

At No. 1 currently is American solar mainstay First Solar (FSLR) and chipmaker Infineon Technologies (INFN). “Europe has intensified its efforts to build clean energy infrastructure as it seeks to wean itself off Russian energy. The clearest example of that is the European Commission’s RePower EU Plan,” Johnson adds. “Further impetus is likely to come from higher traditional energy prices, which are exacerbating the cost-of-living crisis and have shifted the economics decisively in favor of cleaner energy resources.”

US Stocks Mixed, Tech Steady, While Dollar Rallies on Hawkish Powell Remarks: What’s Driving Markets Thursday

Finally, it’s worth noting that larger ETFs tend to charge lower expense ratios, because they can spread the costs of running the fund across more assets. So the cheapest funds may often be the largest funds, and a low expense ratio is a key measure of what makes a top ETF. The offers that appear on this site are from companies that compensate us.

With $2.6 billion invested in the fund as of February 2022, USO is relatively liquid. Its expense ratio, however, is the highest of the ETFs on this list at 0.83%, equivalent to $8.30 for every $1,000 invested. On top of that, oil has performed poorly over the past three years, leading the fund to lose almost a quarter of its value over that time. As with any other investment type, the process of choosing the best oil ETFs by performance to suit an investor’s needs may begin by narrowing down the choices with an ETF screener.

Crude Oil Research

A CFD is a contract in which you agree to exchange the difference in the price of an asset from when you first open your position to when you close it. You are speculating on the price of the market rather than taking ownership of the stocks. If you open a long position and the stock or ETF does increase in value, you’ll make a profit, but if it falls in price, you’ll make a loss – the opposite is true for a short position. Represents the volume of shares traded on the ETF’s primary exchange throughout the previous business day. Passively managed funds invest by sampling the index, holding a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index.

At present, availability of input data varies across asset classes and markets. To the extent that data becomes more readily available and more accurate over time, we expect that ITR metric methodologies will evolve and may result in different outputs. Where data is not available, and / or if data changes, the estimation methods vary, particularly those related to a company’s future emissions. Because the ITR metric is calculated in part by considering the potential for a company within the fund’s portfolio to reduce its emissions over time, it is forward-looking and prone to limitations. As a result, BlackRock publishes MSCI’s ITR metric for its funds in temperature range bands.

Overall, oil investments can be volatile, thanks to the volatile price of oil. Investors can see large returns as well as large losses in value when investing in oil and https://forex-world.net/ oil-related businesses. The Fidelity MSCI Energy Index ETF is another diversified option for investors who want oil exposure without going all-in on the commodity.

There are several top oil stock ETFs, giving investors many easy ways to add some oil market exposure to their portfolios. If you can deal with volatility, investing in an oil ETF might be a suitable option. Investing in oil through the United States Oil Fund, which aims to track the price of oil directly can be one way for investors who want to try a more active investment strategy without getting directly into commodity and futures trading. Investors looking for exposure to the energy industry have several options to play the sector, so it’s important that they know what they’re doing and what returns and risks each ETF ultimately offers. For this reason, some investors stick to basic broadly diversified index funds, such as those based on the Standard & Poor’s 500 index, and leave the trading to the pros. If you are able to deal with volatility, investing in an oil ETF might be a good idea.

Invesco S&P SmallCap Energy ETF (PSCE)

WTI is the lightest, sweetest oil of the major benchmarks, meaning it has low sulfur and is of high quality. ALPS Distributors, Inc., is the distributor for funds sponsored by the United States Commodity Funds LLC and funds that are series of the USCF ETF Trust and not affiliated with either entity or USCF Investments, Inc. USCF is a registered service mark of United States Commodity Funds LLC. United States Commodity Funds LLC and USCF Advisers LLC are wholly owned limited liability companies of USCF Investments, Inc. (Also known as Mid Price) The price between the best price of the sellers for a trading unit of a given security and the best price of the buyer of a trading unit of a given security.

• This content is provided for informational purposes only, as it was prepared without regard to any specific objectives, or financial circumstances, and should not be relied upon as legal, business, investment, or tax advice.
• We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes.
• ETNs do not own an underlying portfolio of assets and instead are made up of unsecured debt obligations.
• But that’s admittedly less of a concern in energy, where most stocks (large and small) ebb and flow based on the underlying commodity prices.
• 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.

Instead, this fund’s performance is based on the rolling of WTI crude oil futures contracts. These events severely limited USO’s ability to have a substantial portion of its assets invested in the Benchmark Oil Futures Contract. Accordingly, on April 17, 2020, USO commenced investing in oil futures contracts other than the https://trading-market.org/ Benchmark Oil Futures Contract, consistent with its authority to do so pursuant to its prospectus. Oil ETFs, or exchange-traded funds, are baskets of securities that either track the price of oil as a commodity or contain oil stocks. Oil ETFs give investors easy access to a commodity that’s difficult to own and store.