New Oil Subsector ETFs Prove Refined
In the flurry of new subsector ETFs, several energy-related products have hit the market. The old standby ETF for energy exposure not heavily weighted to Exxon Mobil (XOM) has been the Oil Services HOLDR (OIH).
Buying OIH, however, can prove problematic for some investors. As with all HOLDRs, its shares can only be bought in round lots of 100, and those shares trade around $150.
Those two factors could make investing in OIH too inflexible for some. Consider that energy makes up roughly 10% of the S&P 500, while oil services makes up only a quarter of the sector, as measured by the Energy Sector SPDR (XLE). As a result, 100 shares of OIH may be too large of a bet for many investors, as the size of the investment could dominate a portfolio.
State Street Global Advisors and iShares have both recently rolled out funds that allow investors to more flexibly capture the exploration and production (E&P) and services portions of the energy sector.State Street now offers:
- iShares Dow Jones U.S. Oil Equipment & Services (IEZ)
- iShares Dow Jones U.S. Oil and Gas Exploration & Production (IEO)
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