Gramatovich notes that investors should take it as an ominous sign that the largest U.S. oil companies, such as Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), are not major shale players. Those companies only account for scant percentages of shale-focused ETFs such as the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) and the First Trust ISE-Revere Natural Gas Index Fund (NYSEArca: FCG), both of which have been punished in recent weeks. Just last week, Occidental Petroleum (NYSE: OXY) and Pioneer Natural Resources (NYSE: PXD) put shale assets up for sale. [Fracking Foils This ETF]

Exxon is one of just three U.S. companies with the prestigious AAA credit rating. On the other hand, more than 70% of the E&P firms rated by Standard & Poor’s carry junk ratings while 80% of the 115 rated by Moody’s Investors Service do not carry investment-grade ratings.

“We didn’t like most of the high-yield paper in U.S. E&P to begin with. We didn’t see the sustainability in the business model,” said Gramatovich.

He does, however, see opportunity with some high-yield energy issuers. Although HYLD does not any domestic E&P junk paper focused on shale basins, the ETF owns some debt issued by midstream firms as well as debt and equity of producers of Canadian heavy oil, a group Gramatovich likes. Amid increased market share, Canadian heavy oil prices have held up somewhat well this year despite declines in Brent and West Texas Intermediate.

“Panic and contagion has caused everything to trade down in unison,” said Gramatovich. “When the dust settles, there will be clear winners and losers.”

HYLD has a 30-day SEC yield of 8.93% with a duration of 2.62 years compared to 4.21 years on the Barclays U.S. High-Yield Index.

AdvisorShares Peritus High Yield ETF

Tom Lydon’s clients own shares of HYG and JNK.