Oil Company ETFs for Exposure to Energy Commodities - dummies

Oil Company ETFs for Exposure to Energy Commodities

By Amine Bouchentouf

If you can’t decide which oil company you want to invest in when you’re entering commodity investing, you have several other options that allow you to buy the market, so to speak. One option is to buy exchange-traded funds (ETFs) that track the performance of a group of integrated oil companies. Here are a few oil company ETFs to consider:

  • Energy Select Sector SPDR (AMEX: XLE): The XLE ETF is the largest energy ETF in the market. It’s part of the S&P’s family of Standard & Poor’s Depository Receipts (SPDR), commonly referred to as spiders, and tracks the performance of a basket of oil company stocks.

    Some of the stocks it tracks include the majors ExxonMobil and Chevron; however, it also tracks oil services companies such as Halliburton and Schlumberger. You get a nice mix of integrated oil companies and other independent firms by investing in the XLE.

  • iShares Goldman Sachs Natural Resources Sector (AMEX: IGE): The IGE ETF mirrors the performance of the Goldman Sachs Natural Resources Sector index, which tracks the performance of companies like ConocoPhillips, Chevron, and BP, as well as refiners such as Valero and Suncor. Although most of this ETF is invested in integrated oil companies, it also enables you to play a broad spectrum of energy companies.

  • iShares S&P Global Energy Sector (AMEX: IXC): This ETF mirrors the performance of the Standard & Poor’s Global Energy Sector index. Buying this ETF gives you exposure to companies such as ExxonMobil, Chevron, ConocoPhillips, and Royal Dutch Shell. Launched at the end of 2001, the ETF has 35 percent aggregate returns for a three-year period.