How to Buy and Trade Oil ETFs I Top Oil ETFs July 2025

But it’s an inverse ETF, which means it aims to move in the opposite direction. So if WTI gains 50 points in a single day, SCO should move down 100 points. This ETF was launched in 2011; it has an expense ratio of 0.55 %. This ETF was launched in 2006; it has an expense ratio of 0.35 %. This ETF was launched in 2010; it has an expense ratio of 0.87 %. This ETF was launched in 2004; it has an expense ratio of 0.10 %.

Leveraged Oil ETFs

Oil ETFs give investors an easy way to invest in oil or businesses involved in the oil industry. Whenever possible, the fund attempts to fully replicate the target index, holding each stock in approximately the same proportion as its weighting in the index. However, the fund will use a sampling strategy if regulatory constraints or other considerations prevent it from replicating the index. Vanguard’s Equity Index Group uses proprietary software to implement trading decisions that accommodate cash flows and maintain close correlation with index characteristics.

Since then, shale companies have refocused on shareholders’ returns and production costs instead of growth at all costs. The United States Oil Fund tracks the price of West Texas Intermediate light crude oil through futures contracts. Add to that the tug-of-war between environmental concerns, climate policy, and old-school fossil fuel demand, and it’s a complex puzzle. So it’s no surprise that many investors would rather buy an ETF- a neat bundle of oil stocks or price-tracking contracts – than try to pick the next oil giant themselves.

The fund reconstitutes its holdings annually, ensuring it holds the top 100 dividend stocks by the quality of their payouts. It recently jettisoned 23 stocks and replaced them with 23 companies with even higher-quality payouts. As a result, the ETF’s top two holdings are currently ConocoPhillips (4.6% of its assets) and Chevron (4.4%). Oil ETFs work by investing in oil directly, using derivatives such as futures to track the value of oil, or by buying shares in businesses that are part of the oil industry. The ELEMENTS Rogers International Commodity Index Energy ETN is linked to the performance of the Rogers International Commodity Index -Energy Total Return.

Should you Invest in a Canadian Oil ETF?

The index reflects the value of 6 energy commodity futures contracts. RJN is also a sub-index of the Rogers International Commodity Index-Total Return. The top three holdings of PXE are ConocoPhillips (COP), Diamondback Energy Inc. (FANG), and Marathon Petroleum Corp. (MPC). The first two explore and produce oil, gas and other resources, and the third is a downstream energy company focused on refining, marketing and transportation.

Find the best Oil ETFs/ETCs

They do not represent the opinions of Vertigo Studio SA (publishers of FinMasters) on whether to buy, sell or hold shares of any particular stock. US oil production was once considered to be in a terminal decline starting in the 1980s. This all changed with the shale oil revolution, which turned the US back into the world’s leading massive energy producer.

Best Oil ETFs to Buy in 2025

Oil & Gas Exploration & Production ETF (IEO)—the second-biggest oil ETF—has delivered 22% returns, according to YCharts data. The Energy Select Sector fund is venerable in terms of ETFs – it was launched all the way back in 1998. It tracks the Energy Select Sector index, which includes large-cap companies across the US involved in oil and gas, as well as energy equipment. Investing in Canadian oil stocks can be a great way of hedging against inflation given their sensitivity to rising commodity prices. A study by the CFA Institute found that one of the few sectors which outperformed during inflationary periods was energy, with oil stocks, in particular, recording the highest historical returns2.

It tracks the S&P 500 Equal Weight Energy Plus Index, which includes all 25 energy sector stocks in the S&P 500 and assigns each an equal weight regardless of market cap. They tend to earn steadier cash flow than oil and gas producers, making them better oil dividend stocks since they tend to pay high-yielding dividends. In early 2025, the ETF offered a dividend yield of more than 7.5%, making it ideal for investors seeking to generate passive income from the oil market.

• We did a little mythbusting on one of the burning questions of the moment.
• The investing information provided on this page is for educational purposes only.
• The Schwab U.S. Dividend Equity ETF (SCHD 1.03%) is a popular exchange-traded fund (ETF) among dividend investors.
• 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.
• ZEO again invests in the broad energy sector in Canada like most other funds on our list, but equally weights each of the underlying stocks.

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. On the flip side, ETFs that aim to short the price of oil have declined considerably in value. The ProShares Ultra Short Bloomberg ETF (SCO), which inversely tracks oil prices, has shed almost 40% of its value. Investors seeking to generate dividend income could simply buy this ETF. They’d gain exposure to 100 top dividend stocks with a very attractive combined dividend yield of 3.7% based on the fund’s latest dividend payment.

For example, a Canadian oil ETF with a MER of 0.50% would cost you around $50 annually for a $10,000 investment. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy. The Canadian energy sector has faced significantly less volatility than oil futures. Despite this, the Canadian energy sector has underperformed the broader Canadian market significantly over a long period of time.

• A covered call strategy can be useful from an income perspective and perform well in specific market conditions.
• As a general rule, the best time to buy them is when oil prices fall and investors are dumping the sector, and the best time to sell is when prices cycle up, and conventional investors rush to buy.
• The oil giant has increased its dividend payment for 38 straight years.
• Among other large oil ETFs, the Invesco DB Oil Fund (DBO) has returned 28%, while the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has added 22%.
• The first two of these are oil and gas exploration and production companies, while the third is an oilfield services company.

Please note that, whilst we endeavour to provide accurate and useful information, the Content may not be wholly accurate or up-to-date and is subject to change, often at very short notice. The oil industry isn’t going away anytime soon, even with the global shift toward clean energy. In fact, the International Energy Agency (IEA) still expects oil demand to rise through 2030. Let’s face it, the oil market can be a right rollercoaster – prices up one minute, down the next, all depending on what OPEC’s had for breakfast. But despite the chaos, oil still powers our homes, cars, planes and global economy. So if you want a slice of the Best oil etf action without the hassle of picking individual companies, oil ETFs might be your ticket.

Best Oil ETFs

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. As is standard for most of Vanguard’s funds, fees are low with an expense ratio of just 0.10%. The Vanguard Energy portfolio is also available as an Admiral’s Class mutual fund for major investors who are interested in investing at least $100,000 in exchange for lower fees. The oil ETFs we track are commodities ETFs, meaning they track the price of oil through benchmarks such as the Brent Crude Oil or West Texas Intermediate benchmarks. The oil industry is challenging for investors because of its volatility and other risk factors.

Within InvestingPro you can find and compare the performance across ETF benchmarks. These factors, coupled with evolving energy policies, create a dynamic landscape for oil investments. This article will explore some of the most relevant oil ETFs to watch in 2025, highlighting their unique strategies, top holdings, and potential investment opportunities in the ever-changing oil market. We’ll examine ETFs that are gaining attention due to their unique approaches, exposure to different oil benchmarks, and cost-effectiveness, providing you with the insights needed to make informed decisions.