International Energy ETFs Topping Domestic Peers
April 9th, 2014 at 8:15am by Tom Lydon
After trailing the broader market in 2013, the energy sector is trying to shed its laggard status.
Judging by the year-to-date performances turned in by some noteworthy energy ETFs, the sector is improving. The Energy Select Sector SPDR (NYSEArca: XLE) is up 2.6% while the Market Vectors Oil Service ETF (NYSEArca: OIH). Other, more focused energy ETFs have turned in performances on par with, or better than those offered by XLE and friends. [Oil ETF Looks for New Highs]
Include international energy ETFs on that list. The $1 billion iShares Global Energy ETF (NYSEArca: IXC) is up 3.7% since the start of the year. True to its global roots, IXC does feature exposure to the U.S. to the tune of a dominating 51.8% of the ETF’s weight. However, the ETF also offers a credible avenue for exposure to inexpensive European oil majors.
The U.K., France, Italy and Norway combine for about a quarter of IXC’s weight with Royal Dutch Shell (NYSE: RDS-A), BP (NYSE: BP) and Total (NYSE: TOT), Europe’s three largest oil companies found among the fund’s top-10 holdings. IXC does not cheat the conservative investor as Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), the two largest U.S. oil companies, combine for 22% of IXC. [Norway ETFs Look for Momentum]
IXC’s exposure to Shell and Total, the latter of which has been driving the France ETF higher this year, is important because those stocks have traded higher this year (Total is up 10.5%) while Exxon and Chevron are still in the red.
Another global energy ETF to consider is the SPDR S&P International Energy Sector ETF (NYSEArca: IPW). Often overlooked, though it probably should not be, IPW is up nearly 7% this year and hit a new 52-week at $27.45 Wednesday. If IPW can close above $28, it will be the first time the $13.4 million ETF has done so in more than two years.
IPW tracks an ex-U.S. index so Exxon, Chevron and equivalent companies do not reside in the ETF. Rather, IPW is Total. BP and Shell heavy as those stocks combine for over 37% of the ETF’s weight. Canada is over 28% of IPW’s country weight, a relevant factoid at a time when Warren Buffett is investing in Canadian energy firms.
SPDR S&P International Energy Sector ETF
ETF Trends editorial team contributed to this piece.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.