TotalEneriges also takes a value-over-volume investment approach. That helped it deliver the highest return on average capital employed last year among its rivals at 28%. The company seeks to invest in capital review laughing at wall street projects that earn high returns while producing lower emissions. It focuses on high-return oil and liquefied natural gas projects. It’s also building out a cost-competitive renewable energy business.

Below we look at the oil ETFs with the best 12-month performance, lowest fees, and most liquidity. Oil prices, as measured by the Bloomberg Composite Crude Oil Subindex, have dropped by 26% over the past 12 months, significantly underperforming the S&P 500 Index’s 20% gain. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

• The fund has also performed better than all the other funds on our list, gaining 6.30% over the past three years.
• While that’s the case across the board, TotalEnergies has a much wider spread between its ROIC and WACC than Shell, suggesting it’s making more money on its investments for shareholders.
• It can be refined into gasoline and other fuels, and many other products, such as plastics, rely on oil.

Any of these issues can wreak havoc on the oil market, sending stock prices plunging or soaring. Concentration risk is a serious concern for many ETFs – if one or two stocks account for so much of the portfolio, how much diversification are you really getting, after all? But that’s admittedly less of a concern in energy, where most stocks (large and small) ebb and flow based on the underlying commodity prices.

Therefore, it was no surprise that the Pound dropped to its three month low in September right when the oil price production cut became public knowledge. More expensive oil causes apprehension about global economic growth and makes investors rush to the safe haven U.S. dollar, the king of currencies. Naturally, this leaves other currencies, such as the Pound, quite powertrend vulnerable. As 2023 comes to an end, it’s looking as if the fortunes of the oil companies might start to improve. The primary reason for this is an increase in crude oil prices which has pushed them to near their 52 week high levels. Brent oil was trading at $78 at the start of this year, and the prices had hovered around $75 to $85 for most of this year.

Oil and gas stocks can produce significant capital gains from share price appreciation and attractive dividend income. Other investors prefer the big dividends that are common among energy MLPs, which can often be more steady than other sub-sectors. But even there, the companies have major differences in business models that make them more volatile, so it’s important to know what you’re buying.

Invesco DB Energy Fund (NYSE:DBE)

The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. This ETF aims to track the daily price movements of light sweet crude delivered to Cushing, Oklahoma. However, it does not directly hold oil but instead uses futures to try to replicate the movements of oil prices. “Europe has intensified its efforts to build clean energy infrastructure as it seeks to wean itself off Russian energy. The clearest example of that is the European Commission’s RePower EU Plan,” Johnson adds. “Further impetus is likely to come from higher traditional energy prices, which are exacerbating the cost-of-living crisis and have shifted the economics decisively in favor of cleaner energy resources.” The following oil ETFs are commodities ETFs, meaning they track the price of oil through benchmarks such as the Brent Crude Oil or West Texas Intermediate benchmarks.

• Whether GDP continues to grow or slows down is a key determinant behind the Federal Reserve’s decisions to start cutting down rates – which will be a bullish indicator for the economy and the stock market.
• And while the short-term effects of the trade war are hurting Chinese stocks and EEM, he believes the next two or three years will bring growth — potentially at a massive level — to China-based emerging market funds.
• It’s also performed better than funds that are more directly invested in oil as a commodity, losing just 7.64% of its value over the past three years.
• Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site.
• Although fossil fuels have grown controversial in recent years, there’s little sign that the world will stop using oil in the near future.

For instance, the portfolio of our monthly newsletter’s stock picks has beaten the market by over 88 percentage points since March 2017 (see the details here). Some of the portfolio holdings of our monthly newsletter have been activtrades forex broker shared online too. In October, we shared this real estate stock and since then, it’s been up nearly 50 percent. Hydrogen exchange-traded funds (ETFs) enable investors to play the potential boom in this low-emissions fuel.

BOIL And Natural Gas: The Best Way To Profit

For one, if the latest war begins to spread beyond Israel and the Palestinians, oil prices could push even higher. For example, if Israel finds that Iran was behind the attack and launched retaliation, the Strait of Hormuz could be jeopardized. Investing in a hydrogen ETF can be a great way to gain broad exposure to the top stocks in this potentially massive industry.

Best energy ETFs

In fact, you could argue that the heavy allocations to Exxon and Chevron act as ballast because parts of these integrated majors’ businesses can still profit even when oil prices aren’t rising. To compile our list of the best oil and gas ETFs to buy, we first made a list of 20 exchange traded funds. Then, their share price appreciation over the last five years was computed, and the ones with gains greater than 10% are listed below. Producers have gone from drilling to grow oil and gas production at all costs to focusing on investing capital to earn high returns that grow earnings and shareholder value. However, America might still be better off when we look at what’s happening in Europe. Higher oil prices will both curtail British economic growth and make inflation harder to contain.

Oil ETFs make getting into the sector easy by allowing investors to potentially profit from the sector’s upside through either holding a basket of oil stocks or an ETF focused on crude oil prices. There are several top oil stock ETFs, giving investors many easy ways to add some oil market exposure to their portfolios. It previously only invested in “front-month” futures, forcing it to constantly sell contracts about to expire and replace them with futures expiring in the next month – which resulted in disastrous results during 2020’s oil plunge. Subsequent changes allowed it a little more flexibility to invest in longer-dated contracts. As vigilant as ever, investment bank Goldman Sachs was quick to release an analyst note after the latest turmoil in the crude oil sector.

How can I invest in oil ETFs?

It also has a low expense ratio of 0.35%, equal to $3.50 for every $1,000 invested. It’s also performed better than funds that are more directly invested in oil as a commodity, losing just 7.64% of its value over the past three years. The fund’s one-year returns are 68.65%, and its benchmark index is up 69.42% over that same time, as of Feb. 17, 2022.

Best Oil ETFs for 2022

The Defiance Next Gen H2 ETF has the lowest ETF expense ratio among this trio at 0.3%. That makes it stand out as the best option because it provides similar upside exposure to the hydrogen megatrend at a slightly lower cost than other hydrogen ETFs. Your investment style can dictate which kind of fund is best for your portfolio. This hydrogen ETF provides similarly broad exposure to the top hydrogen stocks as the Global X Hydrogen ETF but for a lower expense ratio of 0.3%. According to ETF.com, there are three pure-play sector ETFs focused on hydrogen. Here’s a closer look at the top ETFs to buy for investors seeking focused exposure to the hydrogen sector.

These energy ETFs have amassed significant gains in the last 5 years. The list is ranked in ascending order of the 5-Year performance as of July 28, 2023. Our in-house analysis shows that we can use the sentiment information gathered from the hedge fund filings to classify in advance a select group of stocks that can beat the S&P 500 index by double digits annually on average.

Instead of directly tracking the price of oil, this fund invests in businesses that provide various oil-drilling equipment and companies that offer services to oil production companies. Investors who want exposure to this incredibly valuable natural resource may be interested in investing in exchange-traded funds that focus on oil and oil production. We’ve compiled this list, presented in no particular order, of the best oil ETFs for investors. Retail investors curious about investing in oil have a couple of options—they can invest in oil companies that benefit from high oil prices or, if they’d like more direct exposure, they can trade oil futures. But futures trading can be complicated and risky for inexperienced investors, making an oil ETF a more accessible way to gain direct exposure to oil prices.

For instance, if you own a U.S. stock with a 5% dividend yield, you will lose 15% of it to tax. This means your 5% dividend yield is reduced effectively to 4.25%. While that may not seem like a lot, it can really add up over time to ding your returns if you reinvest dividends. For most Canadians, sticking to a CAD-listed exchange-traded fund (ETF) is best. Not having to pay currency exchange fees can really save you money over the long run. More brokerages also offer commission-free trading, so you buy and sell to your heart’s content.

Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. EPD recently announced the first time they loaded a liquefied petroleum gas-powered vessel. The vessel was loaded with a record of 590,000 barrels of LPG, including cargo fuel.