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The first six weeks of 2010 have been a bit on the tumultuous side, as equity markets that came flying out of the gate have done a complete reversal, heading lower and erasing large chunks of the gains recorded in 2009. While the rocky start has been unnerving for investors anxious over the possibility of a double dip recession, others have found a silver lining in the recent pullback, as some big losses have created attractive entrance points in sectors that now appear to be bargains.

The energy sector sector has been one of the hardest hit in recent weeks, as disappointing earnings reports and concerns over job growth have spooked investors. Unexpected increases in oil inventories and a surprisingly strong dollar have also weighed on the sector in the early part of the year. But after dropping as much as 20% from 2010 highs, some energy ETFs seem to now be offering good value as bargain buys.

Energy ETF Options

With the possible exception of technology, no sector of the economy is widely-available through ETFs as the energy industry. In addition to funds focusing on various segments of the clean energy universe, there are several ETFs offering granular exposure to sub-sectors of the oil and gas industry. From a geographical perspective, there are several options as well, including both U.S. and international ETFs and those that maintain a more global focus. For more head-to-head looks at ETF options, sign up for our free ETF newsletter.

SPDR Select Sector ETF (NYSEARCA:XLE)

The largest and most popular energy ETF, this sector SPDR consists primarily of large-cap U.S. oil and gas companies. Major holdings in XLE include Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), and Schlumberger (NYSE:SLB) (these three in aggregate account for more than 35% of holdings). According to the issuer Web site, XLE is trading at a forward price-to-earnings ratio of just 13.5, its lowest level in months and a discount from the forward multiple for the more broad-based S&P 500. XLE has lost 4.9% so far in 2010.

XLE

iShares S&P Global Energy Index Fund (NYSEARCA:IXC)

This ETF is similar to XLE in that it invests in oil equipment and services companies, exploration and production firms, and refineries. But IXC has a more global focus, tracking the S& Global Sector Index. In addition to U.S. holdings, which account for nearly half of IXC, this fund gives significant weightings to UK and Canadian firms (such as BP and Royal Dutch Shell (NYSE:RDS.A)). IXC has lost more than 8% so far this year, reflecting the difficult economic environment in Europe.

IXC

Global X China Energy ETF (NYSEARCA:CHIE)

Concerns over an overheating economy and rising inflation have sparked concerns that China’s government will be forced to tighten its policies in coming weeks, a move that could ripple through global economies. CHIE is down more than 13% on the year, as both energy equities and China ETFs have sunk lower in recent weeks. Chinese oil companies have been aggressive in their efforts to expand overseas operations, as highlighted by recent reports of Cnooc’s (NYSE:CEO) pursuit of massive Ugandan fields (Cnooc is CHIE’s largest holding at almost 10% of fund assets).

CHIE

Dow Jones Emerging Markets Energy Titans Index Fund (EEO)

For investors looking to make a more diversified play on the energy sector in emerging markets, EEO may be an attractive option. In addition to investments in China’s oil companies, EEO invests heavily in Russian natural gas companies.

Relative to their U.S. counterparts, emerging markets energy stocks may be attractive for two reasons. First, these companies have been far more active in acquiring potentially lucrative oil fields throughout the developing world. Second, as strange as it seems, the potential for adverse government intervention may be far lower in emerging markets, especially considering the outrage that has historically been directed at the industry during boom times for Big Oil. EEO has declined about 9% so far in 2010.

EEO

ProShares Short Oil & Gas (NYSEARCA:DDG)

For investors with a bearish outlook on the energy industry, the ProShares Short Oil & Gas offers a way to establish short exposure to the sector. DDG is designed to deliver daily results equal to the inverse of the Dow Jones U.S. Oil & Gas Index. DDG has gained about 5% so far in 2010, although the fund is down about 17% over the last year.

DDG

Disclosure: No positions at time of writing.

Source: Five Energy ETF Options for Bargain Hunters