Such a huge portfolio of companies at a surprisingly low expense ratio makes XLE one of the best ETFs to buy for 2022. Renewable energy stocks have been very popular in the year 2020 and their popularity 7 places to keep your money continues to increase in 2022. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.

The line graph and table below show historical information about the differences between the daily closing price for shares of the fund (as determined by the fund’s listing exchange) and the fund’s net asset value over certain periods. The vertical axis of the line graph shows the premium/discount expressed as a percentage of NAV. The horizontal axis indicates the date at which the premium/discount occurred. The table shows the number of trading days in which the fund traded at a premium or at a discount to NAV. The Fund’s investments are subject to changes in general economic conditions, general market fluctuations and the risks inherent in investment in securities markets. The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets.

Learn more about the best oil stocks during war benefitting from higher prices. The iShares U.S Oil Equipment & Services ETF, or IEZ, invests in companies providing equipment and other services to the oil industry. For example, companies offer drilling rigs, staff, cranes, and more for a rate, so oil companies have the option to rent rather than own.

Weather Stormy Markets With Active Management

That sometimes resulted in cases where USO was selling contracts for less than what it was buying up new ones for – or sometimes the opposite, buying for less than what it was selling for. However, energy-price chaos in spring 2020 upended USO to the point where it changed its methodology to allow it to hold various months’ contracts. For instance, “global” and “international” might sound the same, but they mean two very different things. An “international” fund typically won’t hold U.S. stocks, while a “global” fund will – and in the case of many global funds, American companies are the largest slice of the pie. Thus, while IGE will move on changes in oil and gas prices, its movement can be affected by other commodities, too. These smaller companies sometimes react more aggressively to oil- and gas-price changes than their larger brethren – good news for PXE when commodity prices spike, but more painful when they slump.

However, VDE tracks the energy components of a much wider index, resulting in a fatter collection of more than 100 sector components. However, energy prices have received an additional boost from overseas, where Russia executed an invasion of neighboring Ukraine. U.S. crude oil prices have shot up 26% this year as a result, to around $114 per barrel currently, sending gasoline prices through the roof. why is the consumer price index controversial Oil ETFs work by investing in oil directly, using derivatives such as futures to track the value of oil, or by buying shares in businesses that are part of the oil industry. As you can see from the funds on this list, the past few years have not been great for oil investments, with the best-performing fund on our list returning below 7%, and three of the five ETFs losing money in the past three years.

This can be appealing for investors who do not want to get into commodity investing directly, but who still want exposure to oil. Crude oil prices have risen over $100 a barrel since Russia’s invasion of Ukraine, and the average gas price in the U.S. has shot above $4 a gallon. If you’re curious about investing in oil, oil ETFs are an easy way to do so. An oil ETF is a type of fund that invests in companies involved in the oil and gas industry, including discovery, production, distribution, and retail.

United States Oil Fund (USO)

The S&P Select Industry Index series is designed to measure the performance of narrow GICS sub-industries. Oil & Gas Exploration & Production ETF seeks to track the investment results of an index composed of U.S. equities in the oil and gas exploration and production sector. The vast majority are futures contracts to buy and sell crude oil from corporations based in the United States.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. The United States Oil ETF seeks to track the daily price movements of West Texas Intermediate Light Sweet Crude Oil Index. Business Involvement metrics are designed only to identify companies where MSCI has conducted research and identified as having involvement in the covered activity. As a result, it is possible there is additional involvement in these covered activities where MSCI does not have coverage.

United States Oil Overview

The United States Oil Fund is an inexpensive ETF that tracks the price of West Texas Intermediate Light Sweet Crude Oil. As is standard for most of Vanguard’s funds, fees are low with an expense ratio of just 0.10%. Check out our list of some of the most profitable oil ETFs on the market to see if the oil sector is right for you.

• The screening applied by the fund’s index provider may include revenue thresholds set by the index provider.
• News & World Report, Money Talks News and several other mainstream outlets.
• Investing in some oil ETFs, such as USO, that aim to track the price of oil directly can be a good way for investors who want to try a more active investment strategy without getting directly into commodity and futures trading.
• The best-performing oil and gas ETF, based on performance over the past year, is the Invesco Dynamic Energy Exploration & Production ETF .
• Investors can see large returns as well as large losses in value when investing in oil and oil-related businesses.
• The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security.

The metric calculations are based on U.S.-listed Crude Oil ETFs and every Crude Oil ETF has one issuer. If an issuer changes its ETFs, it will also be reflected in the investment metric calculations. The following oil ETFs are 18 british pound sterling to danish krone commodities ETFs, meaning they track the price of oil through benchmarks such as the Brent Crude Oil or West Texas Intermediate benchmarks. An exchange-traded fund is a basket of securities that tracks an underlying index.

Risks of investing in oil stocks

This ETF was launched in 2007 and has an expense ratio of 0.75%. The index was launched in 2007 and has an expense ratio of 0.75%. Like other oil ETFs, USL also was adversely affected by Covid-19 and the resultant lockdown. The reduction in the supply of oil had its impact on the price of the index which dropped more than 50%. After hitting the lowest mark of $10.35, the index has improved itself and has fully recovered the loss by March-2021.

• Moreover, USO is one of the largest oil ETFs and one of the best oil ETFs for 2022 with over $3.5B net assets.
• This may influence which products we write about and where and how the product appears on a page.
• Nonetheless, PXE’s biggest holdings are in Occidental Petroleum (6.35%), ConocoPhillips (4.91%) and Devon Energy (4.79%).
• The United States Oil Fund is a more direct way of investing in oil as it seeks to reflect the daily price changes in light sweet crude oil.

The United States Oil Fund LP closely tracks the spot price of the light and sweet crude oil that West Texas Intermediate produces. This fund mimics the results of an underlying benchmark centered around short-term oil futures contracts. Like BNO, USO has a commodity pool investment structure, which means investors must pay capital gains on this oil ETF, too, and should expect a K-1 at tax time. Like USO, ProShares K-1 Free Crude Oil Strategy ETF also tracks a benchmark centered around WTI crude oil contracts.

Best Oil ETFs

Zacks proprietary quantitative models divide each set of ETFs following a similar investment strategy (style box/industry/asset class) into three risk categories- High, Medium, and Low. The aim of our models is to select the best ETFs within each risk category, so that investors can pick an ETF that matches their particular risk preference in order to better achieve their investment goals. XLE was launched in 1988 and has a very low expense ratio of 0.12%.

I have no business relationship with any company whose stock is mentioned in this article. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Data is solely for informational purposes and not for trading purposes or advice. The best-performing oil ETF is the United States Brent Oil Fund LP with a 176.04% five-year return. Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Investopedia requires writers to use primary sources to support their work.