S&P Capital IQ recently pared its rating on the energy sector, the seventh-largest sector weight in the S&P 500, to underweight from marketweight, citing supply issues and rising inventories, among other factors. Even before the plunge in oil prices, large oil producers were experiencing lower returns on capital and some were struggling to meet investment and dividend demands. [Problems for Energy ETFs]
The IQ Merger Arbitrage ETF (NYSEArca: MNA) is also being hampered by the bad news pertaining to the Halliburton/Baker Hughes deal. MNA is off almost 1% today.
MNA provide investors with a diversified approach to a group of takeover targets. The fund capture the spread or difference between a stock’s trading price before a deal is announced and its eventual takeover price. As recently as last week, Baker Hughes was MNA’s second-largest holding.
Market Vectors Oil Service ETF
