Investing in oil is typically reserved for advanced commodity traders — if you’re trying to invest in the commodity itself. But if you’re just looking to gain exposure to oil, and to perhaps try to profit from its big swings, oil exchange-traded funds may be a better approach. Great for long-term investors who want solid exposure to the whole energy sector – not just the mega caps. Lower expense ratios mean more of your investment return is retained. Compare expense ratios across different oil ETFs, but also consider the ETF’s tracking performance and trading volume..
Brookfield Renewable Partners (TSX: BEP.UN)
The fund is on the smaller side, with only $175.3 million in net assets. Locally sourced Brent oil is closer and cheaper to ship, so international consumers tend to go with the option that offers the most value. Williams operates natural gas pipelines and related infrastructure across North America. Halliburton is North America’s largest oilfield services provider, with expertise in completions and drilling.
Their prices can differ due to supply, demand, and logistical factors. Here, we’ll dive into what oil ETFs are, why they’re worth considering for your portfolio, and which ones are poised to perform well in 2025. Plus, you will know how Intellectia.ai’s AI-driven tools can simplify your investment decisions, helping you stay ahead of market trends with confidence. As always, remember that when investing, the value of your investment may rise or fall, and your capital is at risk.
HUC has a long performance track record and is a very small ETF in terms of assets under management. Since the fund only invests in crude oil futures, it does not pay dividends, unlike most energy sector ETFs that invest in stocks of oil companies. The best way to invest in oil is through either a large integrated oil company like ExxonMobil or an oil ETF. Either option provides investors with diversified exposure to the entire oil market value chain (production, transportation, and refining).
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The most inexpensive Canadian ETF offering investors exposure to oil is the HXE. The ETF targets the broad energy sector in Canada and includes the stocks of companies involved in various stages of the energy process, including extraction and transportation. Additionally, we left out commodity ETFs that trade oil, natural gas or refined fuel futures contracts. These tend to carry complex tax treatment – often issuing Schedule K-1 forms at tax time – and come with higher expense ratios and elevated volatility. These factors, coupled with evolving energy policies, create a dynamic landscape for oil investments. A good ETF for those seeking balanced exposure to the U.S. oil and gas sector is the SPDR S&P Oil & Gas Exploration & Production ETF.
- But that’s just one of many ways energy ETFs can fit into your portfolio.
- Finally, we have leveraged oil ETFs, which track the price of crude oil or a specific oil sector, and has a certain performance multiplier.
- This growth is driven by climate policies impact on energy, ESG investing in energy, and sustainable energy investments targeting a diversified global energy stocks list.
- With nearly identical fees and trading liquidity, FENY also works well as a tax-loss harvesting partner for either VDE or XLE.
They can experience significant price swings and may serve as a tactical tool for diversifying or hedging portfolio exposure to energy markets. The United States Oil Fund is an exchange-traded security that provides investors with more direct exposure to oil prices. This approach allows investors to make a directional bet on the price of oil without having to engage in futures trading or risk that an oil stock investment will underperform the price of crude oil. The United States Brent Oil Fund (BNO) tracks Brent crude oil prices, the international benchmark, offering geographic diversification compared to WTI-focused ETFs. Its expense ratio of 0.84% is among the higher end for oil ETFs, reflecting the cost of managing futures contracts.
- For perspective, last year, Chevron produced $15 billion in free cash flow and paid $11.8 billion in dividends.
- It has been delivering accelerated dividend growth in recent years (11% in 2022, 14% in 2023, and 34% in 2024).
- For example, if the price of crude oil falls by 2% in a day, a 3x leveraged crude oil ETF would fall by 6%.
- Williams operates natural gas pipelines and related infrastructure across North America.
- These companies make money by providing midstream services such as operating pipelines or liquefied natural gas (LNG) export facilities.
SPDR S&P Oil & Gas Equipment & Services ETF (XES)
As an investor, you want to be on the side of the winners, and AI is the winning ticket. You simply won’t find another AI and energy stock this cheap… with this much upside. Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. Profit and prosper with the best of Kiplinger’s advice on investing, taxes, retirement, personal finance and much more. Still, this ETF remains a favorite thanks to its rock-bottom fees, deep liquidity and an available options chain for more advanced strategies.
What are the best oil ETFs in Canada right now?
Within InvestingPro you can find and compare the performance across ETF benchmarks. Is it spread along multiple months to alleviate contango issues? Knowing the composition is crucial for understanding the ETF’s price behavior.
OIH gives you leveraged exposure to drilling and engineering companies riding the oil wave. UCO aims to double the daily price movement of crude oil, which means you can win big – or lose even faster. And, unless you’ve been living under a rock the last year or so, you know that policy makers, at least south of the border, are having a very hard time hitting their 2% inflation target. There are plenty more out there to choose from, but this introduction hopefully gets the research and thought process started for investors.
PXI tries to capture trends and ride the wave – perfect if you like technicals over fundamentals. These midstream companies pay reliable dividends and don’t get as rattled by oil price swings. Investing in oil stocks directly can be like trying to predict the British weather. One minute the sun’s shining (aka prices are booming), the next you’re caught in a downpour of falling profits and political drama. Below are 10 of the top oil ETFs you can invest in right now, whether you’re looking for broad exposure, price tracking, or juicy dividends.
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The United States Oil Fund tracks the price of West Texas Intermediate light crude oil through futures contracts. Analysts expect select renewable energy and infrastructure-focused companies to benefit from global energy transition trends, potentially boosting demand and earnings through 2025. Many must‑watch energy companies are blending traditional oil and gas production with renewable energy trends, green hydrogen energy potential, and SAF (Sustainable Aviation Fuel) projects. That being said, as the crude oil prices decline, it anticipates the US producers to accelerate the decreases in drilling and well completion activity, which were ongoing through most of the year. Contango occurs when future oil prices are higher than current prices. Downstream activities in the oil and gas industry involve the refining, processing and distribution of crude oil and natural gas products.
Adding too much of a Canadian oil ETF can leave an investor excessively exposed to the industry’s risks. An ETF tracking oil futures has a different role in the portfolio in most cases. As we mentioned before, investing in an ETF tracking oil futures is generally riskier and more volatile than a more generic energy sector ETF. Energy ETFs also usually have high exposure to the price of oil – they invest in stocks of companies that usually directly benefit from rising oil prices. These can include oil extraction companies or oil transportation companies.
An ETF is a type of fund that collects assets and trades them throughout the day as a sort of “package deal” — in much the same way individual stocks are traded. Therefore, an oil ETF focuses on the oil industry and everything related to it. Add to that the tug-of-war between environmental concerns, climate policy, and old-school fossil fuel demand, and it’s a complex puzzle.
Through her engaging content, Sarah strives to educate and guide investors on their journey towards financial success. The oil industry shows no signs of slowing down in the coming years, and investors should understand that the oil sector has shown losses since 2014 due to overabundance and downward-driven prices. As you can see, each oil ETF has its own pros and cons, allowing you to choose an aggressive or conservative approach to oil investment. The ETF invests almost entirely in 1 specific niche of the oil market, so it is exceptionally volatile and subject to Best oil etf seasonal and unexpected price fluctuations. At the same time, this makes the fund easy to research because you know the oil it tracks.
These funds track the price of West Texas Intermediate, which is the benchmark price for US crude oil. Some funds hold a basket of oil companies, while others invest in commodity futures. The energy sector outlook 2025–2030 includes significant LNG and infrastructure growth. Energy infrastructure companies such as Oneok, Energy Transfer, Williams, and Enbridge are developing new LNG terminals, pipelines, and storage facilities to meet rising export demand. Enbridge is one of North America’s largest energy infrastructure companies, with oil, gas, and renewable operations.