Energy ETF Cheat Sheet: Expenses, Dividends And Returns

by: Michael Johnston

Energy stocks have struggled mightily so far in 2012, as soft demand for petroleum products and progress toward alternative sources of energy have weighed on this sector. Despite the recent challenges, allocations to energy stocks remain a key component of many investing strategies, and this sector is well represented in the portfolios of both buy-and-hold investors and more active tactical traders [see Energy Bull ETFdb Portfolio].

For those seeking to overweight energy stocks, there are a number of ETFs that offer exposure to this sector. The Energy Equities ETFdb Category consists of nearly 30 exchange-traded products, including domestic and international funds, as well as products targeting narrow segments of this market such as exploration and production, natural gas, and coal.

Cheapest Energy Equity ETFs

There is a wide range of expenses in this ETFdb Category; some funds charge as little as 18 basis points while others have expense ratios over 0.80% annually.

The cheapest energy equity ETF is the Energy Select Sector SPDR (NYSEARCA:XLE) at 0.18%, followed by the Focus Morningstar Energy Index ETF (NYSE:FEG) and Energy ETF (NYSEARCA:VDE) at 0.19%.

Commission Free Energy Equity ETFs

There are three ETFs in the Energy Equity ETFdb Category that are eligible for commission free trading, including:

  • Focus Morningstar Energy Index ETF (FEG): Scottrade
  • Energy ETF (VDE): Vanguard
  • China Energy ETF (NYSEARCA:CHIE): E*TRADE, Interactive Brokers

Most Heavily Traded Energy Equity ETF

On an average day, the ETFs in the Energy Equity ETFdb Category trade more than 27 million shares. The most heavily traded ETF in this category is the Energy Select Sector SPDR (XLE), which has an average daily volume of about 15 million shares.

Realtime Ratings: Energy ETFs
Metric Top ETF Rating
Liquidity Energy Select Sector SPDR (XLE) A+
Expenses Energy Select Sector SPDR (XLE) A+
Performance Dynamic Energy (NASDAQ:PXI) A+
Volatility Focus Morningstar Energy Index ETF (FEG) A+
Dividend Market Vectors Oil Services ETF (NYSEARCA:OIH) A+
Concentration MSCI Global Energy Producers Fund (NYSEARCA:FILL) A+

Best Performing Energy Equity ETFs

The performance of energy equity ETFs is all over the board, especially during the last year. As of June 4, 2012, the best performing Energy Equity ETFs are as follows:

Best Performers
1 Year Dynamic Energy (PXI) -14.51%
3 Years Dynamic Energy (PXI) +55.34%
5 Years Dynamic Energy (PXI) +5.17%
As of 6/4/2012

Highest-Yielding Energy Equity ETFs

Energy Equity ETFs aren’t generally known for high dividend payouts, but some products in this ETFdb Category have meaningful dividend yields (as of June 4, 2012):

  • Canadian Energy Income ETF (NYSEARCA:ENY): 3.90%
  • MSCI ACWI ex US Energy Sector Index Fund (NYSEARCA:AXEN): 3.13%

Most Balanced Energy Equity ETFs

When comparing potential ETF investments, it is important to evaluate how deep and balanced the underlying portfolios are. Depth refers to how many individual securities comprise an ETF, while balance refers to how “top heavy” a product is–what percentage of assets are concentrated in the 10 largest individual positions.

  • Deepest Energy Equity ETF: The MSCI Global Energy Producers Fund (FILL) has approximately 300 individual holdings. The Energy GEMS ETF (NYSEARCA:OGEM), Market Vectors Oil Services ETF (OIH), and S&P SmallCap Energy Portfolio (NASDAQ:PSCE) are the “shallowest” ETFs, with 25 individual holdings.
  • Most Balanced Energy Equity ETF: The SPDR S&P Oil & Gas Explor & Product (NYSEARCA:XOP) has just 16.48% of its holdings in the top ten positions. At the other end of the spectrum, the Market Vectors Oil Services ETF (OIH) has over 70% of assets in the top ten stocks.

Disclosure: No positions at time of writing.

Disclaimer: ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships.

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