Oil exchange traded funds (ETFs) are so varied that it is possible to play a completely global fund, and forgo any domestic exposure.
ETFs that track international energy companies are a bit more interesting in terms of mix of holdings and can give a portfolio the diversity you need, reports the ETF Professor. [Energy ETFs Surge As Oil Tops $100.]
Perhaps the fact that earlier this week, Barron’s named Royal Dutch Shell (NYSE: RDS-A) as one of its preferred oil picks, thanks to its reasonable valuation and attractive dividend. and with that company’s reasonable valuation and nice dividend yield, this give m ore of a case for international oil companies. [Oil Driller ETFs Get a Lift From Merger Activity.]
A rundown of the two international oil play ETFs:
- WisdomTree International Energy ETF (NYSEArca: DKA) Offers 7% to Shell while BP was booted after the oil spill, which might appeal to socially-conscious investors. DKA will get you involved with Cnooc (NYSE: CEO), China’s largest offshore oil exploration firm. The United Kingdom and Australia are the top two countries in this fund with each getting a 15% weighting. France comes in at 12%.
- SPDR S&P International Energy Sector ETF (NYSEArca: IPW) This offers exposure to some of the biggest oil sands players, as well as decent exposure to two Shell stocks. BP is also a top holding and Chinese firms are absent. The United Kingdom and Canada are the top countries here, and they account for 60% of the fund’s weight. France, as in DKA, gets a 12.1% weighting.
Tisha Guerrero contributed to this article.