Although I have written that I don't believe having too many ETFs is really a big issue, I am a little puzzled by some recent listings from PowerShares.

On Sept. 20, PowerShares listed nine sector ETFs constructed with Robert Arnott's fundamental indexing method. On Oct. 12, PowerShares listed 10 sector and subsector ETFs (11 in total that day) based on a different methodology they call "Intellidexing."

Between the two batches of ETFs, it duplicated eight sectors.

Because the energy sector is struggling of late, it's useful to explore the two new energy ETFs: the PowerShares Dynamic Energy Sector Portfolio ( PXI) and the PowerShares FTSE RAFI Energy Portfolio ( PRFE).

My initial reaction is to question the utility of more domestic energy funds that own Exxon Mobil ( XOM), Chevron ( CVX) and Conoco ( COP). The two new funds are much different from each other for funds that invest in the same sector, but PRFE doesn't seem to be very different from some existing sector ETFs.

The Arnott-based or RAFI version, PRFE, looks a lot like the Energy Sector SPDR ( XLE). Both funds have 23% in Exxon Mobil. The RAFI fund has 16% in Chevron, while XLE has 13% in Chevron. Coming in at the No. 3 holding for both is Conoco, at 8% of PRFE and 9% of XLE. There are even more similarities in composition.

PowerShares FTSE RAFI Energy Portfolio
PRFE looks like the Energy Sector SPDR but has slightly outperformed its underlying S&P Energy Index
Source: PowerShares

Despite the similarities, PRFE has slightly outperformed the S&P Energy Index that underlies the XLE. That may be because PRFE has an element of active management to it, based on a screen that is run on a regular basis.

This means that over the life of the backtest, changes have been made; even though the two funds look very similar today, they may not have been so similar in the past and may not be so similar in the future. Even so, it is not clear why PowerShares is listing a fund that for now looks identical to most of the other energy ETFs.

In the last two paragraphs, you can substitute for the XLE either iShares DJ Energy Index Fund ( IYE) or the Vanguard Energy ETF ( VDE) because the numbers are almost identical.

The Intellidex version, PXI, is uniquely structured compared with the rest of the bunch.

PowerShares Dynamic Energy Sector Portfolio
PXI is uniquely structured compared with the rest of the bunch
Source: PowerShares

In PXI, Exxon is tied with Chevron for the top holding, but both names are only weighted at 2.64% each. The smaller weight in the mega-cap names gives PXI a dramatically smaller average market cap of $25 billion, vs. $151 billion for the RAFI version.

Exxon Mobil vs. Energy Sector SPDR
Dynamic Energy is less likely to feel Exxon's drag

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