Author Topic: Recommend Energy ETF to invest  (Read 4819 times)

dundee

  • 5 O'Clock Shadow
  • *
  • Posts: 33
Recommend Energy ETF to invest
« on: January 06, 2015, 02:52:55 PM »
Hello fellow Mustachians,

I would like to invest in oil company stocks through either ETF's or No load mutual funds. Any recommendations for good ETF or mutual funds?

I believe the meltdown is temporary. Bad news is good for new investors!

RyeWhiskey

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Recommend Energy ETF to invest
« Reply #1 on: January 06, 2015, 02:58:01 PM »
A simple google search would turn up:
Vanguard Energy ETF (VDE): 0.12% ER, 168 stocks
Energy Select Sector SPDR ETF (XLE): 0.16% ER, 43 stocks

mak1277

  • Pencil Stache
  • ****
  • Posts: 788
Re: Recommend Energy ETF to invest
« Reply #2 on: January 06, 2015, 03:30:33 PM »
A simple google search would turn up:
Vanguard Energy ETF (VDE): 0.12% ER, 168 stocks
Energy Select Sector SPDR ETF (XLE): 0.16% ER, 43 stocks

Yes, but the OP asked for "good" ETFs/Mutual Funds, not just a list.  Are those "good"?

RichMoose

  • Pencil Stache
  • ****
  • Posts: 965
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Recommend Energy ETF to invest
« Reply #3 on: January 06, 2015, 06:46:04 PM »
+1 with RyeWhiskey.

VDE is a good ETF that's well managed at an ultra low cost, like all Vanguard products in general. Morningstar gives it a 5-star rating, although that's not the end all be all. It also has a good mix of integrated majors, E&Ps, refiners, pipelines, and service companies. Its very liquid with on average over 1/4 million units traded each day; bid/ask spreads are very minimal. Over the last 10 years it has tracked its target index almost perfectly after adjusting for the MER. To me it ticks all the boxes in what you should be looking for in an index based ETF.

bingtamers

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Recommend Energy ETF to invest
« Reply #4 on: January 06, 2015, 09:32:31 PM »
In the U.S., smaller energy companies involved in fracking are at risk of going under if oil stays around $50. Larger companies, like Exxon and Chevron, are more diversified; they refine oil, sell fuel to consumers directly, refine/sell jet fuel, and have more traditional, cheaper sources of oil. Also, Chevron pays a 4% dividend. I would feel more comfortable investing in these than in an index fund. Please understand that my primary investments are in Vanguard ETFs like VTI, so it's not that I'm against index investing ... just afraid to put money into newer, smaller energy companies at these oil price levels so avoiding energy ETFs.

sb_NoVA

  • 5 O'Clock Shadow
  • *
  • Posts: 66
Re: Recommend Energy ETF to invest
« Reply #5 on: January 06, 2015, 10:04:35 PM »
Listen to fine people above and don't look for the bottom like I did few weeks ago with RYE (equal weight energy ETF). 

innerscorecard

  • Pencil Stache
  • ****
  • Posts: 589
    • Inner Scorecard - Where financial independence, value investing and life meet
Re: Recommend Energy ETF to invest
« Reply #6 on: January 06, 2015, 11:38:51 PM »
Unless you have done the analysis (and thus would know which individual energy companies you'd like to invest in), what you are doing is speculating and not investing. Be aware of that.

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1463
Re: Recommend Energy ETF to invest
« Reply #7 on: January 07, 2015, 07:32:06 AM »
I'm going to go with SnackDog here. 

I use big market weighted index funds for the bulk of my portfolio.  But each year I have about 5-10% of new contributions I'll throw into what I think looks 'cheap' right now, and when it eventually rebounds I move that money back into my big indexes... so far its worked great.  Right now I've been deciding between tilting international or energy ETFs... I picked international, but I can't fault you for picking oil.

If I was going to play this(and if prices drop much more I might) I would do VDE.  Its not that I think its better than XLE.  I just have my accounts at Vanguard so VDE is commission free.  If you do this... rule #1.  You can't sell it until prices rebound.  Go in knowing that or it will bite you.  If you are comfortable with waiting 5 years to see the gains then do it.  In the short term expect it to bounce around like a game of pong, and keep the long term focus.

Now there is a long term risk:   Highly efficient solar panels, fusion, etc.  If we perfect a cheap nearly infinite energy source we might not need oil anymore.  I know I know... unlikely, but I'm saying this because you don't want to put 100% of your portfolio in energy companies.  Remember... in 1900 railroads were by far the biggest sector, now they are a subcategory of an even smaller sector.  Stay diversified.

HopetoFIRE

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Re: Recommend Energy ETF to invest
« Reply #8 on: January 07, 2015, 08:12:37 AM »
I am interested in investing a small amount of $ in VDE (like 5-10k).  Are ETFs pretty tax efficient (held long-term of course)?  We are in a higher bracket.

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1463
Re: Recommend Energy ETF to invest
« Reply #9 on: January 07, 2015, 10:56:06 AM »
I am interested in investing a small amount of $ in VDE (like 5-10k).  Are ETFs pretty tax efficient (held long-term of course)?  We are in a higher bracket.

ETFs that track an index(most do) are going to be pretty tax efficient.  VDE tracks an index so it should be pretty tax efficient.  There will still be dividends, but you shouldn't see many capital gains.  Capital gains are generated by trading, and index funds don't make changes unless the index itself changes.

dundee

  • 5 O'Clock Shadow
  • *
  • Posts: 33
Re: Recommend Energy ETF to invest
« Reply #10 on: January 07, 2015, 11:33:29 AM »
THanks all.

VDE is interesting, but, the PE is high and the yield is low compared to single oil company stocks like Shell, Chevron or Total. Perhaps I will go with stocks. If I am taking the risk of trying to catch a falling knife, at least the yield should be better.