Editor's note: Don Dion is a money manager and publisher of the Fidelity Independent Adviser family of newsletters, which provides his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds.

There are many oil stock ETFs that offer investors different ways to play the oil industry, but after accounting for fees, volume and assets under management as well as comparing the portfolios, the options can be whittled down to a few best choices. Most of these ETFs are heavily tied to the oil industry and there may be significant exposure to natural gas, but I've left off energy funds that have significant exposure to coal or alternative energy.

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First up are the broad energy ETF, consisting of three large funds with more than half a billion in assets and two smaller funds. The larger funds have very similar weightings, with about 60% of the portfolio concentrated in the top 10, and

Exxon Mobil

(XOM) - Get Report

and

Chevron

(CVX) - Get Report

are the largest holdings by far. The three have very similar performance and therefore, the best choice is to stick with the largest and cheapest option --

SPDR Energy

(XLE) - Get Report

.

The two smaller funds offer two different strategies.

PowerShares Dynamic Energy

(PXI) - Get Report

uses the Intellidex Index. According to PowerShares, "The Index thoroughly evaluates companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investments and risk factors. Securities shown to possess the greatest capital appreciation potential are selected by the Index."

Rydex S&P Equal Weight Energy

(RYE) - Get Report

is the other fund, which equally weights the holdings. Last fall both of these strategies underperformed the market. Since early April, when oil prices started a determined rise, they have outperformed but still lag over one- and two-year time periods. With only a small amount of assets and higher fees, the larger funds make better options.

When it comes to the international energy ETFs, by assets and fees

iShares S&P Global Energy

(IXC) - Get Report

is the choice by far. IXC is a global fund whereas the other two are exclusively international, but this hasn't led the fund to over- or underperform widely from the other two.

There are two groups of subsector funds -- equipment and services and exploration and production. The former has four funds available and three have acceptable fees and assets under management.

iShares Dow Jones U.S. Oil Equipment & Services

(IEZ) - Get Report

has the most assets and largest volume, but the

SPDR S&P Oil & Gas Equipment & Services

(XES) - Get Report

and

PowerShares Dynamic Oil & Gas Services

(PXJ) - Get Report

are not far behind.

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Furthermore, the three portfolios have different constructions -- IEZ's cap-weighted approach has

Schlumberger

(SLB) - Get Report

at number 1 with 21.1% of assets. XES and PXJ have more balanced portfolios; the top holding in XES is

Nabors Industries

(NBR) - Get Report

at 5.4%, while PXJ's top holding is

Transocean

(RIG) - Get Report

at 5%. Both funds also have less than 46% of assets among the top 10, compared to 65% for IEZ.

Although they have similar returns, XES has had slightly better performance and offers the lowest fees, so therefore is the best choice. Another fund,

First Trust Energy AlphaDEX

(FXN) - Get Report

(FXN), has only 9 million in assets but has a quantitative portfolio selection method that results in the top two holdings of

Key Energy Services

(KEG) - Get Report

(KEG) and

Oil States International

(OIS) - Get Report

. It has 36% of assets in the top 10, making it the least concentrated. Long-term, its returns are similar to the other funds, but this year it has underperformed by about 20 percentage points.

Finally, of the three exploration and production ETFs, the choice here is slightly easier because

PowerShares Dynamic Energy Exploration & Production

(PXE) - Get Report

holds Exxon and Chevron as its top two holdings. This frequently caused PXE to underperform the other two funds.

Between

iShares Dow Jones U.S. Oil & Gas Exploration & Production

(IEO) - Get Report

and

SPDR S&P Oil & Gas Exploration & Production

(XOP) - Get Report

, the major difference is not performance or assets but rather that XOP is less concentrated, with higher volume and lower fees. Here again, the SPDR looks to be the best choice for both long- and short-term investors.

SPDRs generally have the better energy ETFs for long-term investors, except for the low-volume

SPDR S&P International Energy

(IPW)

(IPW). In that case,

iShares S&P Global Energy

(IXC) - Get Report

offers the best option.

Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers. Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years� experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.