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Best Sector of February and Its Top ETFs

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Oil prices have staged a rally lately with United States Oil Fund LP (USO - Free Report) and United States Brent Oil Fund LP (BNO - Free Report) adding about 17.4% and 17.9%, respectively, past month. The real surge was noticed from Feb 11, due to a cold snap. Freezing weather also hurt power supply, which in turn curtailed about 500,000 to 1.2 million barrels per day (bpd) of crude production in the Permian Basin of Texas.

Winter storm and arctic blast of cold weather in Texas had extremely adverse impacts on the oil industry. “Frigid weather means that many oil wells may be shut in. Water is produced along with oil, that water can freeze up equipment,” oil analyst Andy Lipow wrote last month, as quoted on CNBC.

Prices also gained as Yemen's Iran-aligned Houthi group had said it struck airports in Saudi Arabia with drones, flaring supply concerns in the world's biggest oil exporter. If this was not enough, vaccine distribution, hefty stimulus hopes under the Biden presidency and faster global economic recovery have been aiding the oil demand and driving prices. No wonder, such factors have made the energy sector a star performer in February.

Below we highlight the winning energy ETFs of the month.

Top ETFs

Dynamic Energy Exploration & Production Invesco (PXE - Free Report) – Up 27.6%

The underlying Dynamic Energy Exploration & Production Intellidex Index is composed of stocks of 30 U.S. companies involved in the exploration and production of natural resources used to produce energy. ConocoPhillips (8.27%), Denbury (7.43%) and Pioneer Natural Resources (7.27%) are the top three stocks of the fund. It charges 63 bps in fees.

Unconventional Oil & Gas Vaneck ETF (FRAK - Free Report) – Up 24.7%

The underlying MVIS Global Unconventional Oil & Gas Index tracks the overall performance of companies involved in the exploration, development, extraction, and/or production of unconventional oil and natural gas. ConocoPhillips (12.16%), Pioneer Natural Resources (11.36%) and EOG Resources (7.39%) are the top three holdings of the fund. It charges 54 bps in fees.

DWA Energy Momentum Invesco ETF (PXI - Free Report) – Up 23.4%

The underlying DWA Energy Technical Leaders Index identifies companies that are showing relative strength, and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on US exchanges. SM Energy (5.65%), Clean Energy Fuels (4.99%) and Matador Resources (4.81%) are the top three holdings of the fund. It charges 60 bps in fees.    

Oil Services Vaneck ETF (OIH - Free Report) – Up 22.7%

The underlying MVIS U.S. Listed Oil Services 25 Index tracks the overall performance of U.S.-listed companies involved in oil services to the upstream oil sector, which include oil equipment, oil services, or oil drilling. Schlumberger (19.37%), Halliburton (11.69%) and Baker Hughes (6.01%) are the top holdings of the fund. The fund charges 35 bps in fees.

Natural Gas ETF First Trust (FCG - Free Report) – Up 22.7%

The underlying ISE-Revere Natural Gas Index is an equal-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas. The fund charges 60 bps in fees.         

US Oil & Gas Explor & Prod iShares ETF (IEO - Free Report) – Up 22.3%

The underlying Dow Jones U.S. Select Oil Exploration & Production Index is a free-float adjusted market capitalization-weighted index. The Index includes companies that are engaged in the exploration for and extraction, production, refining, and supply of oil and gas products. The fund charges 42 bps in fees.

S&P Smallcap Energy Invesco ETF (PSCE - Free Report) – Up 22.2%

The underlying S&P SmallCap 600 Capped Energy Index is designed to measure the overall performance of common stocks of US energy companies. PDC Energy (9.04%), Helmerich & Payne (8.02%) and Renewable Energy Group (7.94%) are the top three holdings of the fund.

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