A Surge of Energy ETFs
Although I have written that I don't believe having too many ETFs is really a big issue, I am a little puzzled by some recent listings from PowerShares.
On Sept. 20, PowerShares listed nine sector ETFs constructed with Robert Arnott's fundamental indexing method. On Oct. 12, PowerShares listed 10 sector and subsector ETFs (11 in total that day) based on a different methodology they call "Intellidexing."
Between the two batches of ETFs, it duplicated eight sectors.
Because the energy sector is struggling of late, it's useful to explore the two new energy ETFs: the PowerShares Dynamic Energy Sector Portfolio (PXI) and the PowerShares FTSE RAFI Energy Portfolio (PRFE).My initial reaction is to question the utility of more domestic energy funds that own Exxon Mobil (XOM), Chevron (CVX) and Conoco (COP). The two new funds are much different from each other for funds that invest in the same sector, but PRFE doesn't seem to be very different from some existing sector ETFs. The Arnott-based or RAFI version, PRFE, looks a lot like the Energy Sector SPDR (XLE). Both funds have 23% in Exxon Mobil. The RAFI fund has 16% in Chevron, while XLE has 13% in Chevron. Coming in at the No. 3 holding for both is Conoco, at 8% of PRFE and 9% of XLE. There are even more similarities in composition.
|PowerShares FTSE RAFI Energy Portfolio
PRFE looks like the Energy Sector SPDR but has slightly outperformed its underlying S&P Energy Index
|PowerShares Dynamic Energy Sector Portfolio
PXI is uniquely structured compared with the rest of the bunch
|Exxon Mobil vs. Energy Sector SPDR
Dynamic Energy is less likely to feel Exxon's drag
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