10 Best Oil ETFs Canada

10 of the best oil ETFs for Canadian investors to consider are:

1. United States Oil Fund LP (USO)
2. Invesco DB Oil Fund (DBO)
3. iShares U.S. Oil & Gas Exploration & Production ETF (IEO)
4. SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
5. iShares Global Energy ETF (IXC)
6. BMO Equal Weight Oil & Gas Index ETF (ZEO)
7. Horizons Crude Oil ETF (HUC)
8. iShares S&P/TSX Capped Energy Index ETF (XEG)
9. SPDR S&P Oil & Gas Equipment & Services ETF (XES)
10. Invesco S&P SmallCap Energy ETF (PSCE)

1. United States Oil Fund LP (USO)

The United States Oil Fund LP (USO) offers investors access to crude oil’s price and tries to track West Texas Intermediate (WTI) crude oil futures contracts’ performance.

To do this, the fund invests in oil futures contracts, allowing investors to take part in both short-term and long-term oil price movements.

Investing in USO can be a wise choice for those wishing to diversify their portfolios and benefit from the oil industry’s potential growth.

With its concentration on WTI crude oil, one of the most traded commodities in the world, this ETF gives investors a great opportunity to gain exposure to the energy sector.

Furthermore, USO’s capacity to respond rapidly to market trends makes it a popular choice among traders seeking short-term trading opportunities.

USO’s liquidity is an attractive feature for traders, giving them the ability to enter or exit positions quickly.

2. Invesco DB Oil Fund (DBO)

The Invesco DB Oil Fund (DBO) seeks to track crude oil performance by investing in futures contracts.

Low expense ratio and diversified holdings make DBO a great choice.

As global demand grows, DBO provides a way to potentially benefit from the growth.

DBO has a unique index-based approach.

This strategy helps track crude oil market performance with transparency and efficiency.

Additionally, daily liquidity allows investors to buy or sell shares during trading hours.

Despite its success, DBO is still subject to market risks and volatility.

Performance depends on various factors like geopolitical events, supply and demand dynamics, and economic conditions.

3. iShares U.S. Oil & Gas Exploration & Production ETF (IEO)

The iShares U.S. Oil & Gas Exploration & Production ETF (IEO) provides exposure to companies involved in oil and gas exploration and production.

Firstly, it offers access to a diversified portfolio of stocks from various companies, reducing risk.

Plus, this broad exposure helps you benefit from any upswings in oil and gas.

Moreover, IEO has shown consistent performance over time.

Its strategic allocation to different companies lessens risk from volatile commodity prices and company-specific issues.

You get a chance to participate in potential growth opportunities within the oil and gas sector too.

Global energy demands keep rising, so companies in exploration and production are well-placed to benefit.

It combines stability and growth potential, making it ideal for those seeking energy investment opportunities.

4. SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) gives investors exposure to companies involved in exploration and production.

The ETF tracks the S&P Oil & Gas Exploration & Production Select Industry Index.

This includes companies engaged in activities like drilling, refining, and distribution.

XOP’s focus on small- and mid-cap stocks is unique.

It opens up opportunities for investing in companies with growth potential but not yet widely known.

5. iShares Global Energy ETF (IXC)

The iShares Global Energy ETF (IXC) focuses global companies, giving investors a chance to take part in the energy industry.

This ETF has lots of investments in exploration, production, and distribution.

It also looks to invest in various regions to give investors a broad view.

It invests in well-known energy giants but also in emerging markets with more growth opportunities.

6. BMO Equal Weight Oil & Gas Index ETF (ZEO)

BMO Equal Weight Oil & Gas Index ETF (ZEO) provides investors with exposure to the Canadian oil and gas sector.

Its equal weight strategy ensures each stock holds an equal weighting, meaning no single company dominates.

This spreads investments across various stocks, diversifying the portfolio and mitigating risk.

The ETF has a strong track record of delivering consistent returns.

It has demonstrated resilience and adaptability through various market cycles and economic conditions.

7. Horizons Crude Oil ETF (HUC)

The Horizons Crude Oil ETF (HUC)allows investors to access the price movements of crude oil.

Investing in this ETF offers a convenient way to get involved in crude oil performance.

The ETF follows the price of crude oil futures contracts, providing a cost-effective and accessible investment option.

One thing that stands out about Horizons Crude Oil ETF is its ability to provide long and short exposure to crude oil.

Meaning, investors can make a profit from both increasing and decreasing oil prices.

This flexibility fits both bullish and bearish market conditions, giving traders various ways to invest.

In the past, investing in commodities such as crude oil was primarily for institutional investors or those with special knowledge.

But with the arrival of oil ETFs like HUC, individual retail investors now have access to this exclusive asset class.

8. iShares S&P/TSX Capped Energy Index ETF (XEG)

The iShares S&P/TSX Capped Energy Index ETF tracks companies in the energy sector that are listed on the S&P/TSX Capped Energy Index.

Investing in XEG gives you a diversified portfolio of Canadian energy stocks.

XEG uses a capped methodology, which limits each stock’s weight in the index.

This prevents any single company from dominating the fund’s performance – giving you a well-diversified portfolio.

Plus, XEG also offers potential dividend income from many energy sector companies.

9. SPDR S&P Oil & Gas Equipment & Services ETF (XES)

The SPDR S&P Oil & Gas Equipment & Services ETF (XES) focuses on companies providing equipment and services to the oil and gas sector.

This ETF especially targets firms that offer essential equipment and services supporting operations within the industry.

Consequently, investors can potentially gain from the progress and success of these companies.

XES has a varied portfolio.

It invests in many companies operating in the oil and gas sector, making sure investors have exposure to various parts of the market.

This diversification can reduce risk and optimize possible returns.

XES has proven to be resilient even during periods of instability in the Canadian oil industry.

10. Invesco S&P SmallCap Energy ETF (PSCE)

The Invesco S&P SmallCap Energy ETF (PSCE) focuses on small-cap companies in the energy sector.

This gives investors the chance to benefit from potential growth of small energy companies.

Benefits of investing in this ETF include:

  • Investing in small-cap companies may yield higher returns than larger ones.
  • A diversified portfolio, like PSCE, mitigates risk by spreading across multiple small-cap energy companies.

To make the most out of PSCE, here are some tips:

  • Research components of the ETF thoroughly to identify opportunities and risks.
  • Monitor performance and adjust investment strategy accordingly.
  • Keep up with market conditions and news related to the energy sector.

What is an Oil ETF?

An Oil ETF, also known as an oil exchange-traded fund, is a type of investment fund.

It tracks the performance of oil prices or oil related investments.

Rather than trading commodities directly, investors can benefit from appreciation in oil prices by buying shares in an Oil ETF.

Oil ETFs offer the ability to invest across different sectors within the oil industry.

This means that investors can choose ETFs that track specific segments like exploration and production, refining companies, or renewable energy firms.

Key Considerations When Investing in Oil ETFs

When investing in oil ETFs, there are several things to bear in mind.

Here are some key considerations:

  • Analyze the ETF and the oil market performance; trends and patterns can help you make educated decisions.
  • Assess the stability and reliability of the issuer. Search for well-known financial institutions with a track record.
  • Check the expense ratio and fees. Lower expenses can significantly influence your returns over time, so pick an ETF with competitive fees.
  • Diversify! Invest in multiple businesses across different sections of the oil industry; this will help reduce risk. Look for ETFs with exposure to exploration, production, refining, and distribution companies.
  • Stay updated on geopolitical events and regulatory changes that can affect oil prices. Follow news and industry reports to anticipate market movements.
Oil rig pumping with stock chart in background

Frequently Asked Questions

  • What are oil ETFs?
  • Why should I invest in oil ETFs?
  • How do oil ETFs work?
  • What are the risks associated with oil ETFs?
  • How can I invest in oil ETFs in Canada?

 
DISCLAIMER: This is not investment advice. Recommendations are for educational purposes only, presented as a path for you to further research. Please seek independent financial advice before making any financial decisions. PiggyBank is not liable for any investment decisions you make based on the information presented on this website.