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Should You Invest in the iShares U.S. Oil Equipment & Services ETF (IEZ)?

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Designed to provide broad exposure to the Energy - Equipment and services segment of the equity market, the iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) is a passively managed exchange traded fund launched on 05/01/2006.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Equipment and services is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $200.05 million, making it one of the average sized ETFs attempting to match the performance of the Energy - Equipment and services segment of the equity market. IEZ seeks to match the performance of the Dow Jones U.S. Select Oil Equipment & Services Index before fees and expenses.

The Dow Jones US Select Oil Equip & Serv Ind is a free-float adjusted market capitalization-wghtd index. It measures the performance of oil equipment & services sector of US equity market by including companies that are suppliers of equipment or services to oil fields & offshore platforms, such as drilling, exploration, engineering, logistics, seismic information services & platform construction.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.65%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.

Looking at individual holdings, Schlumberger Nv (SLB - Free Report) accounts for about 21.83% of total assets, followed by Halliburton (HAL - Free Report) and Technipfmc Plc (FTI - Free Report) .

The top 10 holdings account for about 75.36% of total assets under management.

Performance and Risk

Year-to-date, the iShares U.S. Oil Equipment & Services ETF has added about 48.86% so far, and is up about 33.44% over the last 12 months (as of 10/27/2022). IEZ has traded between $12.24 and $21.54 in this past 52-week period.

The ETF has a beta of 1.91 and standard deviation of 58.90% for the trailing three-year period, making it a high risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.

Alternatives

IShares U.S. Oil Equipment & Services ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IEZ is an outstanding option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) tracks S&P Oil & Gas Equipment & Services Select Industry Index and the VanEck Oil Services ETF (OIH - Free Report) tracks MVIS U.S. Listed Oil Services 25 Index. SPDR S&P Oil & Gas Equipment & Services ETF has $278.78 million in assets, VanEck Oil Services ETF has $2.89 billion. XES has an expense ratio of 0.35% and OIH charges 0.35%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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