What are the Best Oil ETFs Right Now for Your Portfolio?

Things can seem a little complicated if you’re not... [Energy and Capital Header] Practical Investment Analysis for the New Energy Economy What are the Best Oil ETFs Right Now for Your Portfolio? Keith Kohl | Jul 09, 2024 So you’re looking for the best oil ETFs right now to fit into your portfolio, and you don’t know where to start? Most individual investors tend to get tripped up when deciding to add an ETF to their portfolio — and particularly an energy or oil-focused exchange traded fund. After all, you don’t want to waste your hard earned money on exorbitant high management fees, do you? And now that WTI prices are trading comfortably above $80/bbl and the summer inventory draws will soon start accumulating from healthy summer demand, this is the time when the sector starts receiving a lot of attention from investors. I can’t say I blame them, either. The veteran members of our investment community have seen through the [demand delusions]( from places like the IEA, which are forced to go back and revise their estimates regularly. At some point, investors will see past their pessimism and realize that the supply/demand fundamentals behind oil prices today are tighter than most people realize. Things can seem a little complicated if you’re not used to navigating the oil sector. First, let’s first take a look at the differences between certain oil ETFs. New Nuclear Energy Could Mint Millionaires A new kind of nuclear power is about to transform the grid. Forbes calls it "the go-to energy source in America." It’s called a small modular reactor, or SMR. The first one of these cutting-edge reactors is expected to come online on U.S. soil this year. Tech billionaire Marc Andreessen calls for "1,000 new state-of-the-art nuclear power plants in the U.S. and Europe right now." AND almost ALL these SMRs have to buy fuel from one Midwestern company. Most people don’t even know this company exists... That’s why shares are set to skyrocket as soon as this story hits the mainstream. [Get the full story here while there’s still time.]( Choosing the Best Oil ETFs The first thing to understand is that there are dozens of different energy and oil-specific ETFs to choose from, with two main types taking most of the market’s attention: price-based or stock-based. Price-based oil ETFs are exactly what it sounds like. These ETFs will give you a direct connection to the ebb and flow of crude prices. In other words, they track the price of oil through specific benchmarks, which means you aren’t putting your money into any specific companies. Here’s a look at the 5 largest price-based oil ETFs today: Name Symbol Assets Expense Ratio 2024 YTD Performance United States Oil ETF USO $1.2 billion 0.70% 22.1% Proshares Ultra Bloom Crude ETF UCO $527.5 million 0.95% 33.5% Powershares DB Oil Fund DBO $237.1 million 0.75% 16.4% Proshares K-1 Free Crude Oil Strategy ETF OILK $124.9 million 0.71% 18.5% United States 12-Month Oil Fund LP USL $64.9 million 0.79% 17.8% If you’re like me, then there’s a good chance that you don’t want to spend your days agonizing over the daily fluctuations in crude oil prices. You know just as well as I do that there are a myriad of factors that can weigh heavily — whether for good or worse — on the daily price of crude oil. BREAKING: Biden Announces “Stimulus Stipends” Payouts (Claim Yours NOW)... 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Stock-based oil ETFs can offer the kind of diversity within a sector that some like. Below, you’ll find the five biggest energy ETFs out there today, which happen to be deeply tied to the oil and gas industry. Name Symbol Assets Expense Ratio 2024 YTD Performance Energy Select Sector SPDR Fund XLE $37.9 billion 0.09% 9.2% Vanguard Energy ETF VDE $10 billion 0.10% 9.2% Alerian MLP ETF AMLP $8.8 billion 0.85% 17.9% SPDR S&P Oil & Gas Exploration & Production ETF XOP $3.5 billion 0.35% 6.3% First Trust North American Energy Infrastructure Fund EMLP $2.5 billion 0.96% 12.4% I’m sure you’ll notice right away that among the five largest energy ETFs, at least two are primarily focused on oil and gas infrastructure stocks, which come with an added bonus of distributions — Alerian MLP (NYSE ARCA: [AMLP](), for example, comes with a 7.38% annual yield. If you can overcome the disadvantages that ETFs bring to the table versus owning the individual companies themselves — such as dealing with trading fees, operating expenses, or the fact that these ETFs won’t be as fluidly traded as the individual companies — then these investment vehicles certainly add a “set it and forget it” sentiment to your portfolio. Unfortunately, the biggest drawback is that in addition to those disadvantages, you’re essentially buying the same basket of energy stocks that everyone else is. The top five holdings in XLE are Exxon, Chevron, EOG Resources, Schlumberger, and ConocoPhillips, which together account for more than half of its net assets! So, it’s no secret as to why your returns may be lower than actively picking your oil plays.  What it also means is that these ETFs are also unlikely to find the [real hidden investment gems]( the U.S. oil patch, such as this small driller in the Permian Basin that could be the next one to get scooped up by Big Oil. [Go ahead and take a look for yourself.]( Until next time, [Keith Kohl Signature] Keith Kohl [[follow basic]Check us out on YouTube!]( A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. 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