Energy ETF

One of the most popular and lucrative sectors of the exchange traded fund (ETF) market, energy ETFs allow investors to diversify their portfolios while taking advantage of the opportunities available in the energy discovery, manufacturing, and production sector. Energy ETFs do not include commodities like gas, oil, or coal; these are traded separately in commodity ETFs. Instead, energy ETF securities focus on the industries that create and produce these commodities, making them an attractive choice for short-term investment. Like all sector ETFs, energy ETF investments have the potential for high returns on investment, but also carry with them a significant degree of financial risk.

Energy ETF list


Because of the volatile nature of the ETF market and of the energy industry sector in particular, no energy ETF list can hope to be comprehensive; however, here are some of the leaders in the energy ETF sector.
  • iShares S&P Global Energy Sector Index Fund (IXC)
  • iShares Goldman Sachs Natural Resources Index Fund (IGE)
  • iShares Dow Jones U.S. Energy Sector Index Fund (IYE)
  • iShares Dow Jones U.S. Oil Equipment & Services Index Fund (IEZ)
  • iShares S&P Global Nuclear Energy Index Fund (NUCL)
  • SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
  • SPDR S&P Oil & Gas Equipment & Services ETF (XES)
  • Claymore Global Solar Energy ETF (TAN)
  • Claymore/SWM Canadian Energy Income ETF (ENY)
  • PowerShares Dynamic Energy Sector Portfolio (PXI)
  • Rydex S&P Equal Weight Energy ETF (RYE)
  • ProShares UltraShort Oil & Gas (DUG)
  • PowerShares Cleantech Portfolio (PZD)

Green energy ETFs


The alternative energy ETF market offers significant risks and rewards for investors; focused primarily on solar technologies and alternative fuels, alternative energy ETF investments tend to be more speculative and risky than traditional energy ETFs. Most alternative energy ETFs indicate the fact by including terms like alternative energy, clean energy, or solar energy in the name of the fund. Wind power, solar energy technologies, and even nuclear power are leading components of most alternative energy ETF portfolios; these energy sources offer promise for a cleaner environment and fewer fossil-fuel emissions in the future, making alternative energy ETF investments a solid choice for environmentally responsible investors.

Case study: Vanguard energy ETF


One of the leading energy ETFs on the market, the Vanguard energy ETF currently comprises 161 stocks with the majority in integrated oil and gas industry holdings including oil and gas exploration, drilling, refining, storage and production. Vanguard energy ETF holdings include such household names as Exxon, Chevron, Halliburton, ConocoPhillips, and Schlumberger. The fund tracks the performance of the MSCI U.S. Investable Market Energy Index; it achieves this by maintaining an overall stock portfolio that approximately recreates the key aspects of the MSCI index including dividend yield and earnings. Investors in the Vanguard energy ETF can enjoy some of the highest returns on investment in the ETF sector market, but are also subject to major losses during tough economic conditions.
Tim Ord
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