Exchange traded funds (ETFs) have allowed investors to tap into the energy market without futures or oil and gas stocks. There are a broad number of options now, as the market has grown for these types of investment tools.
Decide if this will be the anchor for your portfolio, or an added investment that will add risks and benefits associated with specialized trading.
Chuck Marvin for TheStreet has some high-performing ETF options for passive investors:
- iPath Dow Jones-AIG Commodity Index (DJP): This is a diversified portfolio of energy, metal and agricultural products. Offers protection against inflation of current commodity values. A 0.75% expense ratio.
- iShares Dow Jones US Oil and Gas Exploration Index (IEO): Holds stocks of companies involved in the exploration and production of natural gas and oil. It takes a market capitalization approach with an expense ratio of 0.48%.
- SPDR S&P Oil and Gas Exploration & Production (XOP): Holdings include domestic oil and gas producers, with a fixed weight approach to asset allocation. Expense ratio 0.35%.
- iPath S&P GSCI Crude Oil Total Return Index (OIL): An unleveraged path to investment in Nymex West Texas intermediate crude oil futures. With an expense ratio of 0.75%, it takes a fixed-weight approach determining asset allocation of its portfolio.
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.