New ETF Drills Into Fracking Space
NEW YORK (TheStreet) -- This week Van Eck launched the Market Vectors Unconventional Oil & Gas ETF (FRAK). The ticker symbol gives an indication that fracking (hydraulic fracturing) of shale oil and shale gas is a key theme in the fund. Other so-called unconventional extraction methods targeted by the fund include coal seam gas, coal bed methane and even oilsands.
The fund has 44 constituent holdings but some of the largest names are more like large diversified energy companies with varying levels of involvement in the "unconventional oil and gas" space. Occidental Petroleum (OXY) is the largest holding in the fund at 8.5%, EOG Resources (EOG) 7.4% and Devon Energy (DVN) 6.4% all have wide footprints across the energy industry including unconventional methods like fracking. Canadian Natural Resources is also a large holding at 7.6% and is a mostly in oilsands but still diversified.
When I first heard of the fund I figured it would be a small-cap-oriented product but really it is more mid cap. FRAK has an average weighted market cap of $20 billion compared to $129 billion for Energy Select Sector SPDR (XLE) and just over $1 billion for the PowerShares S&P Small Cap Energy Portfolio (PSCE). The average weighted market for XLE is so large because over 30% of the fund is allocated to Exxon Mobil (XOM) and Chevron (CVX).
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