A Checkup on Energy ETFs

When the price of light, sweet crude hit record prices just north of $135 a barrel on May 21, the surge highlighted what has been a remarkable run for commodities -- and, naturally, commodity ETFs.

The United States Oil Fund(USO Quote) is now up a staggering 113.8% vs. a year ago. Natural gas has also heated up in recent months as the United States Natural Gas Fund (UNG Quote) has been the top performing ETF so far in 2008. It is up 45.4% year to date.

Other surging commodity-based ETFs include the SPDR S&P Oil & Gas Exploration & Production ETF (XOP Quote), the iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund (IEO Quote), the SPDR S&P Oil & Gas Equipment & Services ETF (XES Quote) and the iShares Dow Jones U.S. Oil Equipment & Services Index Fund (IEZ Quote).

"Energy has been one of the few shining stars this year," said Ric Edelman, founder of Edelman Financial. For individual investors still looking to get into energy stocks, Edelman favors the use of ETFs. "We have been using ETFs extensively," he said. "They offer an excellent way to obtain exposure to a diverse range of sectors and at a very low cost." ...