For starters, the VanEck Vectors Unconventional Oil & Gas ETF (NYSEArca: FRAK) may be a pure play on this energy segment as FRAK focuses on companies involved in the exploration, development, extraction, and/or production of unconventional oil and natural gas. Unconventional oil and gas includes coal bed methane, coal seam gas, shale oil, shale gas, tight natural gas, tight oil, tight sands, in situ oil sands, and enhanced oil recovery.
FRAK also includes a hefty 54.5% tilt toward large-cap companies, which helps balances out its large 41.5% position in mid-sized companies. However, the large-cap weight may hold back the ETF if small-caps continue to rally in the current pro-domestic growth environment.
The SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES), which follows a more equal-weight methodology, could also benefit from the quick pickup in the shale industry. Fracking companies are constantly drilling new wells to replace lost production, which could drive up demand for energy equipment and services.
Additionally, the PowerShares S&P SmallCap Energy Portfolio (NasdaqGM: PSCE) provides a close play on shale oil companies, focusing on small-cap exploration, production, services and equipment companies. PSCE’s largest holding, PDC Energy (NasdaqGS: PDCE) 17.4%, has shale oil operations in the Wattenberg Field and the Utica Field. However, due to its small-cap focus, the fund is much more volatile than its peers.