Investing in Oil Company Exchange-Traded Funds - dummies

Investing in Oil Company Exchange-Traded Funds

If you can’t decide which oil company you want to invest in, you have several other options at your disposal, which 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:

  • iShares S&P Global Energy Index Fund (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.

  • Energy Select Sector SPDR (AMEX: XLE): The XLE ETF is the largest energy ETF in the market. It is part of the S&P’s family of Standard & Poor’s Depository Receipts (SPDRs), 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 as well as other independent firms by investing in the XLE.

  • iShares Goldman Sachs Natural Resources Index Fund (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 a majority of this ETF is invested in integrated oil companies, it also provides you with a way to play a broad spectrum of energy companies.