VDE and comparable cap-weighted energy ETFs allocate hefty portions of their lineups to the largest oil companies, including Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) along with Schlumberger (NYSE: SLB), the largest oilfield services provider. In some cases Exxon Mobil and Chevron, the two largest U.S. oil companies, combine for up to a third of these ETFs’ weights.
SEE MORE: Why Investors are Bearish on Oil ETFs
Integrated oil stocks have refining exposure, a segment that benefits when oil prices are low due to improved margins. That can help steady diversified energy ETFs like XLE because these are not dedicated exploration and production funds.
“Traders should attempt to purchase shares of VDE at $96 with an objective of $110 for a potential return of nearly 15%. Investors can also add this ETF to their long-term portfolios as a cornerstone investment in the energy group. VDE is rated a four-star fund by Morningstar and has a yield of 2.4%,” adds InvestorPlace.
For more information on the Energy ETF market, visit our Energy category.
Vanguard Energy ETF