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

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

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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 11, placing it in bottom 31%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $229.50 M, making it one of the average sized ETFs attempting to match the performance of the Energy - Equipment and services segment of the U.S. 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.44%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.49%.

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 16.11% of total assets, followed by Halliburton (HAL - Free Report) and National Oilwell Varco Inc (NOV - Free Report) .

The top 10 holdings account for about 60.70% of total assets under management.

Performance and Risk

So far this year, IEZ has gained about 0.13%, and is down about -8.97% in the last one year (as of 04/14/2018). During this past 52-week period, the fund has traded between $29.67 and $40.81.

The ETF has a beta of 1.26 and standard deviation of 32.12% for the trailing three-year period, making it a high risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.

Alternatives

IShares U.S. Oil Equipment & Services ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IEZ, then, is not a great choice for investors seeking exposure to the Energy ETFs segment of the market. However, there are better ETFs in the space to consider.

SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) tracks S&P Oil & Gas Equipment & Services Select Industry Index and the VanEck Vectors Oil Services ETF (OIH - Free Report) tracks MVIS U.S. Listed Oil Services 25 Index. SPDR S&P Oil & Gas Equipment & Services ETF has $369.51 M in assets, VanEck Vectors Oil Services ETF has $1.63 B. 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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