While the two have their differences, either can be integrated into the portfolios of risk tolerant investors. The average dividend yield for the two ETFs is just over 1%, a far cry from what investors are accustomed to receiving with an integrated oil stock like Chevron (NYSE: CVX). Considering risk-adjusted returns with an ETF like IEO or XOP is critical because both are more volatile than a broader energy ETF that is heavily allocated to mega-cap integrated names.
For example, IEO’s three-year standard deviation is 26.2% compared to 19.8% for the iShares U.S. Energy ETF (NYSEArca: IYE).
iShares U.S. Oil & Gas Exploration & Production ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of IEO.