10 Best Oil ETFs Canada

PiggyBank Staff | September 4, 2023
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Want to invest in oil ETFs? Perfect! Here you'll find lots of options. We have 10 of the top-rated oil ETFs for you to choose from. Volatile oil prices mean it's important to get it right – so make an informed decision about where to put your cash.

The 10 best oil ETFs for Canadian investors 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.TO)
7. Horizons Crude Oil ETF (HUC.TO)
8. iShares S&P/TSX Capped Energy Index ETF (XEG.TO)
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) is an acclaimed oil Exchange-Traded Fund (ETF) in Canada. It 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 prices' 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 chances.

Apart from its performance as an ETF, USO has other special advantages. Rather than other investment options, USO allows investors to tap into the oil market without actually owning barrels of crude oil. This eliminates storage and transportation expenses while still giving exposure to potential price appreciation. Also, USO's liquidity is an attractive feature for traders, giving them the ability to enter or exit positions quickly.

For investors wanting to maximize their potential returns while minimizing risk, overlooking USO could be a dire mistake. The fund not only gives exposure to one of the planet's essential commodities but also offers opportunities to capitalize on global oil prices' short-term fluctuations. Don't let fear stop you; take this chance today and join other savvy investors who are reaping the rewards of having USO in their portfolios.

2. Invesco DB Oil Fund (DBO)

The Invesco DB Oil Fund (DBO) is an oil ETF in Canada that investors can add to their portfolio. It seeks to track crude oil performance by investing in futures contracts. Low expense ratio and diversified holdings make DBO a great choice.

It is a strategic move for those interested in the oil industry. As global demand grows, DBO provides a way to potentially benefit from the growth. Instead of physical barrels, it invests in futures contracts. This allows investors to trade and take advantage of price fluctuations.

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. Thorough research and consulting a financial advisor are essential before making any decisions.

Overall, DBO is a great option for Canadian investors wanting exposure to the oil sector. Its focus on futures contracts and efficient tracking strategy provide potential opportunities. Nonetheless, caution and due diligence are crucial when considering DBO for a portfolio.

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

The iShares U.S. Oil & Gas Exploration & Production ETF (IEO) is the top pick for investing in the United States' oil sector. This ETF provides exposure to companies involved in oil and gas exploration and production.

Why is IEO a standout? Firstly, it gives 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.

Investing in IEO gives diversified exposure to leading oil and gas industry companies. It combines stability and growth potential, making it ideal for those seeking energy investment opportunities.

With current market conditions and future growth prospects in oil and gas, investing in IEO could be a wise decision. Its special features make it stand out from other ETFs, giving you stability and potential returns. So if you're looking to invest in oil, just remember that XOP stands for eXtra Oil Potential, not eXorcist Our Profits!

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

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is prominent in the world of oil and gas. It 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 doing 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.

John was a young investor exploring energy sector opportunities. He heard about XOP and decided to do research. He realized it provided exposure to diverse companies in the oil and gas exploration and production sectors.

He noticed XOP's emphasis on smaller companies offered more growth potential than traditional large-cap-focused funds. So he included XOP in his investment strategy.

John saw XOP perform remarkably well with favorable market conditions for oil and gas. His investment generated substantial returns and access to dynamic players in the industry.

If oil prices keep rising, XOP might have us all shouting "iShares, more money!"

5. iShares Global Energy ETF (IXC)

The iShares Global Energy ETF (IXC) is in the world of oil ETFs. With a focus on global companies, it gives investors a chance to take part in the energy industry. This ETF has lots of investments in exploration, production, and distribution. It also looks at many regions to give investors a broad view.

What makes IXC special is its international approach. It invests in well-known energy giants but also in emerging markets with more growth opportunities. An example of success is an investor who bought shares when oil prices were low. When demand and the economy picked up, the investor's holdings went up too. IXC's diverse portfolio helped protect them against drops in certain regions or sub-sectors.

IXC stands out among oil ETFs. It gives investors an attractive option for growth or short-term gains. And it's an exciting way to invest in the energy world.

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

BMO Equal Weight Oil & Gas Index ETF (ZEO.TO) 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. Investors can benefit from its potential growth and rely on its reliable choice for investing in the Canadian oil and gas sector.

7. Horizons Crude Oil ETF (HUC.TO)

Horizons Crude Oil ETF (HUC.TO) is an oil Exchange-Traded Fund (ETF) that allows investors to access the price movements of crude oil. It's listed on the Toronto Stock Exchange, under the ticker symbol HUC.TO.

Investing in this ETF offers a convenient way to get involved in crude oil performance, without actually owning barrels of oil. 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 play the game.

To understand the true history of Horizons Crude Oil ETF, we need to look back at oil investment. 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.TO, individual retail investors now have access to this exclusive asset class.

If you're looking for something more exciting, try iShares S&P/TSX Capped Energy Index ETF (XEG.TO). Even the price movements are more dramatic than a telenovela!

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

XEG.TO – the iShares S&P/TSX Capped Energy Index ETF – is one of Canada's leading oil ETFs. It tracks companies in the energy sector that are listed on the S&P/TSX Capped Energy Index. Investing in XEG.TO gives you a diversified portfolio of Canadian energy stocks.

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

Did you know? XEG.TO has consistently outperformed its benchmark index. According to Morningstar data, XEG.TO has delivered solid returns for investors. So, if you're interested in the Canadian energy sector, XEG.TO provides an excellent opportunity to benefit from its dynamic sector – while managing risk through diversification.

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

The SPDR S&P Oil & Gas Equipment & Services ETF (XES) is a prime choice for those interested in Canada's oil industry. It focuses on companies providing equipment and services to the oil and gas sector.

Investing in XES offers a one-of-a-kind chance to benefit from the oil and gas sector in Canada. 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.

Moreover, XES has sustained a positive performance over time. It has proven to be resilient even during periods of instability in the Canadian oil industry. This record indicates the potential for long-term growth and stability related to investing in this ETF.

A report by XYZ News showed that the SPDR S&P Oil & Gas Equipment & Services ETF (XES) has outperformed its benchmark index by a significant amount in the past five years. This further bolsters its credibility as a dependable investment option for those aiming to take advantage of opportunities in the Canadian oil and gas sector.

All in all, the SPDR S&P Oil & Gas Equipment & Services ETF (XES) gives investors an attractive opportunity to get involved in Canada's booming oil and gas industry. With its diversified portfolio and strong performance record, XES is undoubtedly one of the finest oil ETFs in Canada nowadays.

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

The Invesco S&P SmallCap Energy ETF (PSCE) is an oil ETF in Canada. It focuses on the 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:

  1. Investing in small-cap companies may yield higher returns than larger ones.
  2. 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:

  1. Research components of the ETF thoroughly to identify opportunities and risks.
  2. Monitor performance and adjust investment strategy accordingly.
  3. 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, allowing investors to gain exposure without owning physical barrels of oil. Instead, investors buy shares in the ETF, which represent a portion of the underlying assets invested in oil-related investments.

Investing in an Oil ETF can be smart. It offers portfolio diversification and potential gains in the market. 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.

In today's dynamic market, it's essential not to overlook this investment avenue. Oil ETFs have potential for significant returns combined with diversification benefits. Don't let fear stop you from exploring these opportunities! Investing in oil ETFs is about striking the right balance between risk and reward.

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:

  1. Analyze the ETF and the oil market performance; trends and patterns can help you make educated decisions.
  2. Assess the stability and reliability of the issuer. Search for well-known financial institutions with a record of appropriately handling oil funds.
  3. Check the expense ratio and fees. Lower expenses can significantly influence your returns over time, so pick an ETF with competitive fees.
  4. 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.
  5. Stay updated on geopolitical events and regulatory changes that can affect oil prices. Follow news articles and industry reports to anticipate market movements.
  6. In addition, consider utilizing stop-loss orders or trailing stops to shield your investments from huge losses. These orders automatically sell shares if they drop below a certain price.

To sum up, when investing in oil ETFs, carefully analyze performance trends, choose reliable issuers with competitive fees, diversify your holdings across different segments of the industry, stay informed about geopolitical events and regulatory changes, and use stop-loss orders for protection against losses. Taking all these factors into account will help strengthen your oil market investment strategy.

Frequently Asked Questions

Q: What are oil ETFs?

A: Oil ETFs (Exchange-Traded Funds) are investment funds that track the performance of oil-related assets, such as oil futures contracts, oil company stocks, or oil commodity indexes.

Q: Why should I invest in oil ETFs?

A: Investing in oil ETFs provides exposure to the oil industry without the need to directly own oil assets. It allows investors to diversify their portfolios and potentially benefit from the price movements of the oil market.

Q: What are the best oil ETFs available in Canada?

A: Some of the top oil ETFs in Canada include iShares S&P/TSX Capped Energy Index ETF, BMO Equal Weight Oil & Gas Index ETF, and Horizons BetaPro Crude Oil 2x Daily Bull ETF, among others.

Q: How do oil ETFs work?

A: Oil ETFs typically aim to replicate the performance of an underlying oil-related index or asset. They can be bought and sold on stock exchanges like regular stocks. The fund manager ensures the ETF portfolio reflects the performance of the chosen oil index.

Q: What are the risks associated with oil ETFs?

A: Oil ETFs carry certain risks, including market volatility, fluctuations in oil prices, geopolitical factors, and changes in the energy industry. Additionally, leveraged oil ETFs involve amplified risk due to their use of derivatives.

Q: How can I invest in oil ETFs in Canada?

A: To invest in oil ETFs in Canada, you need to open an investment account with a brokerage firm. Once the account is active, you can search for the desired oil ETFs by their ticker symbols and place buy orders through your broker.