Launched on 05/01/2006, the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy – Exploration segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy – Exploration is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
The fund is sponsored by Blackrock. It has amassed assets over $947.97 million, making it one of the larger ETFs attempting to match the performance of the Energy – Exploration segment of the equity market. IEO seeks to match the performance of the Dow Jones U.S. Select Oil Exploration & Production Index before fees and expenses.
The Dow Jones U.S. Select Oil Exploration & Production Index is a free-float adjusted market capitalization-weighted index. The Index includes companies that are engaged in the exploration for and extraction, production, refining, and supply of oil and gas products.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 4.03%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund’s holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector–about 100% of the portfolio.
Looking at individual holdings, Conocophillips (COP) accounts for about 18.78% of total assets, followed by Eog Resources Inc (EOG) and Pioneer Natural Resource (PXD).
The top 10 holdings account for about 60.62% of total assets under management.
Performance and Risk
The ETF has lost about -6.34% and was up about 23.21% so far this year and in the past one year (as of 02/21/2023), respectively. IEO has traded between $71.91 and $105.94 during this last 52-week period.
The ETF has a beta of 1.61 and standard deviation of 50.28% for the trailing three-year period, making it a high risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
IShares U.S. Oil & Gas Exploration & Production ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IEO is a great option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco Dynamic Energy Exploration & Production ETF (PXE) tracks Dynamic Energy Exploration & Production Intellidex Index and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) tracks S&P Oil & Gas Exploration & Production Select Industry Index. Invesco Dynamic Energy Exploration & Production ETF has $224.92 million in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $3.74 billion. PXE has an expense ratio of 0.63% and XOP charges 0.35%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares U.S. Oil & Gas Exploration & Production ETF (IEO): ETF Research Reports
ConocoPhillips (COP) : Free Stock Analysis Report
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports
Invesco Dynamic Energy Exploration & Production ETF (PXE): ETF Research Reports
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