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How to Invest in Energy ETFs

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  • (1:10) - Why Is The ETF Market So Quite On Energy?
  • (6:30) - Engine No. 1 Transform Climate ETF: NETZ
  • (11:00) - Understanding How An ETN Works: Is It A Safe Way To Invest In Energy?
  • (15:20) - What Is The Best Way To Gain Exposure To Energy Using ETFs?
  • (27:00) - Episode  Roundup: ONG, NRGU, NETZ, XLE, PXE, PXI, GUSH, VDE, XOP
  •                Podcast@Zacks.com

 

Welcome to Episode #304 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Neena Mishra, Zacks Director of ETF Research and the host of the podcast, ETF Spotlight, joins the podcast to discuss the hot energy sector.

How can you invest in energy stocks using ETFs?

In the past, the ETF industry has been fast to launch new products when a sector is hot, but the energy ETF industry is still dominated by the Energy Select Sector SPDR ETF (XLE - Free Report) , which has been around since 1998.

And the new launches have been limited to the Direxion Daily Oil Services Bull 2X ETF (ONG - Free Report) which launched in Jan 2022.

Is there still lack of interest in oil stocks or are the concerns about ESG keeping them out?

Big Oil Dominates

The XLE and the other big energy ETF, Vanguard Energy ETF (VDE - Free Report) , both are top heavy with ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) by far the two largest positions.

ExxonMobil and Chevron are 38.5% of Vanguard Energy ETF and are an even bigger portion of the XLE at 44%.

ExxonMobil shares have been hot in 2022, gaining 25%. Chevron has jumped 12.8%. Both are out performing the S&P 500 which is down 9% during that time.

They both are also paying juicy dividends. ExxonMobil is paying a dividend yielding 4.6% and Chevron is yielding 4.3%.

A Basket of the Producers

If you want to avoid owning ExxonMobil and Chevron, there’s the SPDR S&P Oil & Gas E&P ETF (XOP - Free Report) .

It’s an equal weight ETF. The XOP is used by investors who only want to own the niche area of the producers, which excludes Big Oil and the Services.

What Else Do You Need to Know about the Energy ETFs?  

Tune into this week’s podcast to find out.