By taking aim at indices dominated by smaller, independent producers such as the SPDR S&P Oil & Gas Exploration & Production ETF (IEO) and the First Trust ISE Revere Natural Gas Index ETF (FCG) can help investors keep their energy exposure close to home. The Guggenheim Canadian Energy Income ETF (ENY) is another product to keep an eye on.
In addition to focusing solely on Canada-based energy producers, the fund offers an attractive dividend that will likely be appealing in the event that high energy prices upend the market's strength.
Already, investors have witnessed first-hand the benefits of using FCG and IEO to play the energy field. Over the past month period, both funds have managed to handedly outpace large-cap-dominated products like the Energy Select Sector SPDR (XLE) and the iShares S&P Global Energy Sector Index Fund
The looming threat of rising energy prices will continue to dominate discussion and impact investor sentiment until some sort of resolution is resolved. While a band-aid-like solution like the one we saw last summer is likely, aggressive long term-minded investors may find funds like IEO and FCG to be attractive bets on a more-dramatic shift in this sector.Whatever option is exercised, however, investors must use caution. As with any sector-specific ETF, these energy products should be viewed as small, niche holdings. Written by Don Dion in Williamstown, Mass.