But XOP represents efficient access to an interesting slice of the energy sector, and I have used it on and off to get a toe hold in that industry. That said, XOP has a 90% decline from top to bottom on its performance resume. But when market sentiment is favorable toward the energy sector, XOP often performs well. OILK’s structure minimizes tax complexity while providing commodity exposure, though specific performance data for 2025 is less readily available (Investing.com).

List of Best Energy Stocks in the World in 2025

Each ETF provides investors with exposure to crude oil either directly (United States Oil Fund) or indirectly through oil stocks. These ETFs should rise along with oil prices, with oil stock-focused ETFs having the potential to outperform crude prices. They give investors broad exposure to the oil market in a single investment. That helps mitigate the risks of investing in oil stocks that underperformed their sector peers due to company-specific problems like mismanagement or too much debt. HUC tracks the price of NYMEX light sweet crude oil futures, giving investors a way to invest in oil prices without owning physical barrels. Ironically, while energy is considered a commodity, energy ETFs are far from a “commoditized” group of investments.

The fund uses a market weight strategy, so assets are highly concentrated at the top. Two of the world’s largest integrated energy companies by market cap comprise almost 40% of the fund’s total holdings. HUC tracks the Solactive Light Sweet Crude Oil Winter MD Rolling Futures Index ER. Rather, it gains exposure to the price of crude oil by using futures contracts, which are derivatives that bet on the future anticipated value of a commodity. As of September 2024, HUC costs a MER of 1.11% and is best suited for short-term trading or hedging purposes. Investing in energy sector stocks offers growth and income potential, but it also carries unique risks.

Bloomberg Brent Crude performance

While the benchmark differs from that of VDE or XLE, the overall exposure and historical performance are very similar. With nearly identical fees and trading liquidity, FENY also works well as a tax-loss harvesting partner for either VDE or XLE. Try our ETF Screener or compare funds side by side with our ETF Comparison tool. The SPDR S&P Oil & Gas Equipment & Services ETF tracks the S&P Oil & Gas Equipment & Services Select Industry Index and currently has about $286 million in assets. Check out oil ETF movers we’re watching so that you can get in on the action at the right time. Our partners cannot pay us to guarantee favorable reviews of their products or services.

Best Oil and Gas Stocks to Buy According to Analysts

Downstream companies take the raw materials produced by upstream activities and convert them into finished products such as gasoline, diesel fuel, jet fuel and petrochemicals. An example of a downstream oil ETF is theVanEck Vectors Oil Refiners ETF (CRAK). Rather than storing barrels of oil yourself, crude oil ETFs allow you to invest in oil price contracts, futures, and options, which are a much more efficient and safer way to invest in oil. You can protect yourself against losses by making oil ETFs only a small percentage of your portfolio. Balance your selections with an investment in a total market index fund in case the oil industry continues to deal with oversupply and low prices. The fund invests in the stocks of the most liquid oil production and distribution companies and leaders of the industry in to limit the effects of the volatile nature of the oil market.

HXE provides exposure to the S&P/TSX Capped Energy Index, similar to XEG, but uses a corporate class structure to enhance tax efficiency. This makes it attractive for investors looking for energy sector exposure while minimizing tax drag on returns. Different Strategies for Investors – These ETFs offer exposure to crude oil futures, energy producers, and midstream infrastructure, catering to different risk appetites. One benefit of Canadian oil ETFs is the possibility of an increased distribution schedule. While most Canadian oil stocks pay quarterly dividends, some Canadian oil ETFs will pay monthly distributions by aggregating the dividends paid by the underlying stocks.

Best Oil ETFs

This is a market cap-weighted index, meaning that larger companies hold larger positions in the index (and, therefore the ETF). This fund invests in both local and foreign companies, but all of its holdings are listed on US exchanges. Oil services companies offer a variety of energy-related services, including exploration, equipment maintenance, refining, and much more. It’s a small fund in comparison to the USO, with only $83.4 million in net assets. The DB oil fund currently has over $238.2 million in net assets and a 0.75% expense ratio. There are dozens of funds to choose from, so it is sure to fit your investment objectives and risk tolerance.

Other related ETFs:

• The United States Oil Fund is an inexpensive ETF that tracks the price of West Texas Intermediate Light Sweet Crude Oil.
• Get a piece of the pie is by investing in an oil exchange traded fund (ETF).
• As a more specific oil and gas investment in the midstream Canadian energy space, HOG from Horizons is a good potential option to consider for oil exposure.
• NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.
• Compare the performance against oil price benchmarks, but consider the tracking error.

It’s a good option for investors seeking diversified exposure to Canada’s energy sector. Energy sector stocks can be highly sensitive to commodity price swings. Changes in oil price forecast 2025, gas demand, or electricity market dynamics can impact revenues for both oil & gas producers and renewable energy stocks. While past performance doesn’t guarantee future results, examining historical data can provide insights into how different funds have navigated various market conditions. Here’s an overview of some notable crude oil etfs based on their historical performance metrics. The best crude oil ETFs are Energy Select SPDR Fund, Vanguard Energy ETF, Alerian MLP ETF, SPDR S&P Oil & Gas Exploration & Production ETF, and United States Oil Fund LP.

Since the oil and gas sector has specific characteristics, investing in an oil or energy ETF makes sense for certain investors. However, oil prices have a direct effect on these companies in terms of their bottom line, so wide swings in crude prices have a significant impact on these stocks. This written/visual material is comprised of personal opinions and ideas and may not reflect those of the Company. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions.

From oil price forecast 2025 volatility to policy changes and supply chain challenges, Best oil etf understanding these factors is essential for choosing the best energy stocks 2025 and avoiding pitfalls. A Oil & Gas ETF targets the exploration, production, or distribution segments of the petroleum and natural gas industry, sectors essential for global energy supply. It typically holds shares of companies ranging from integrated energy giants to equipment and service providers.

• They are an easy way to invest in oil markets, but they do carry risk.
• By integrating technical analysis tools, you can track patterns and indicators to make data-driven decisions, whether you’re swing trading or holding long-term.
• However, they both trade WTI futures as their sole holding, so the differences tend to be minimal.
• It typically holds shares of companies ranging from integrated energy giants to equipment and service providers.
• Global energy companies face evolving climate policies and stricter ESG investing in energy requirements.

The International Energy Agency (IEA) expects oil demand to continue growing through 2030. Oil companies should be able to increase their production and cash flow to meet demand, giving them the funds to provide value to their shareholders through share repurchases and dividend payments. For the most part, it wasn’t hard to see how this short-term collapse in crude oil demand was temporary. In fact, we’ve witnessed a complete 180 in the industry over the last few years as energy prices have surged. Despite that generally higher risk profile, XOP sells at a notably lower valuation (price-earnings ratio) than the other two ETFs covered here.

Canadian oil ETFs pay distributions, which can consist of dividends from the underlying stocks, capital gains, or return of capital. Depending on how the distributions are categorized, they can be taxed differently. When investors buy shares of a Canadian oil ETF, they receive proportional exposure to all the underlying oil stocks. This approach requires less money, as you must only buy a single ETF instead of shares of multiple different individual Canadian oil stocks.

Meanwhile, individual oil companies face their own set of problems. Adding to the industry’s difficulties is the capital-intensive nature of oil production. It costs a lot of money to drill and complete wells to maintain and increase production rates. Oil and gas companies need to reinvest a significant portion of their cash flow to sustain their output, which can be more challenging when prices fall.