Developed Market ETFs Tap Into Energy Industry
NEW YORK (TheStreet) -- The global energy industry will likely be an interesting region of the market to watch in the New Year. At the same time that emerging markets are turning to various fuel sources to feed their insatiable thirsts for energy, developed corners of the globe will be seeking resources such as oil, coal and natural gas in an attempt to prolong their ongoing recovery pictures.
ETF investors can utilize a number of strategies when it comes to capturing the strength of the energy industry in 2011. Products such as
iShares Dow Jones U.S. Oil Equipment & Services Index Fund
(IEZ) - Get Report
or
Market Vectors Coal ETF
(KOL) - Get Report
will provide investors with ample exposure to a diverse collection of energy-related firms hailing from around the globe.
Meanwhile, investors seeking more exotic ways to access energy may find a diverse collection of internationally focused ETFs satisfying as well. Funds such as
Market Vectors Russia ETF
(RSX) - Get Report
, and
iShares MSCI Brazil Index Fund
(EWZ) - Get Report
dedicate large percentages of their portfolios to energy conglomerates including
Petroleo Brasiliero
(PBR) - Get Report
and
Gazprom
(OGZPY)
.
However, while the energy heavy portfolios of EWZ and RSX may be appealing, cautious minded investors may be put off by the added risk that comes with exposure to the emerging markets. Luckily, there are energy rich, international products which focus on the developed world as well. These funds may better satisfy this type of risk tolerance.
The
Guggenheim Canadian Energy Income ETF
(ENY)
and the
Global X FTSE Norway 30 ETF
(NORW) - Get Report
are two ways investors can take advantage of international energy from a developed market perspective. As evidenced throughout December, the oil and gas industries of Norway and Canada are forecast to become increasingly essential to satisfying global energy demand. ENY and NORW are two tools investors can use to utilize this ongoing trend.
Norway's energy rich locale has become a major draw for China throughout 2010. Most recently, in mid-Dec, China Oilfield Services inked a large deal with Norwegian energy goliath,
Statoil
(STO)
in an effort to tap the nation's resources.
Statoil is listed as NORW's largest component, representing nearly 20% of the fund's total portfolio. From a sector perspective, oil and gas companies make up more than 40% of the fund's assets.
Canada's energy industry, meanwhile, is forecast to grow increasingly essential to the global economic picture as well. Recently, in comments made during a trip to New York, the nation's Finance Minister, Jim Flaherty, highlighted some of the Canada's many resource-specific strengths and pointed to the nation as an emerging energy superpower.
While there are a number of Canada-focused ETFs available, ENY is unique in that it provides investors with pure-play exposure to the Canadian oil and gas industries. The fund's index is comprised of a basket of both oil and gas producers and royal trusts.
Aside from capturing the promise of Canada's energy sector, investors holding ENY are treated to a welcomed distribution.
Energy will surely be an exciting corner of the market to watch as we progress along the road to economic recovery. Using ENY and NORW, ETF investors can tap into two of the hottest energy markets found within the developed world.
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.