Low Cost Funds for Betting on an Oil Rebound

Morningstar's Kenneth Lamont identifies low-cost funds for investors seeking to fuel portfolio returns via energy securities

Kenneth Lamont 24 February, 2015 | 3:25PM
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With the global energy sector still reeling from the largely unanticipated halving of oil prices in the second half of 2014, contrarian investors may feel the time is right to increase their exposure to the commodity.  

Practically this can be achieved in one of two ways; either directly, by buying an ETC (Exchange Traded Commodity), or indirectly, by investing in publicly-listed energy companies.

Oil ETCs: Plenty of Options but Beware

There is a range of options available when considering Oil ETCs. But it’s important to understand that, due to liquidity constraints and storage costs, all crude oil ETCs track indices based on futures contracts rather than the underlying price of the commodity. This means that investors’ returns may diverge from that of the underlying spot price.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
BP PLC361.95 GBX0.14Rating
ConocoPhillips75.32 USD1.10Rating
iShares Oil & Gas Explr&Prod ETF USD Acc GBP1,391.00 GBX-0.32Rating
Royal Dutch Shell PLC B1,798.80 GBX0.49Rating
WisdomTree Energy ETC3.81 USD-0.57
WisdomTree WTI Crude Oil ETC7.61 USD0.73
Xtrackers WTI Crude Oil Optimum Yld ETC52.15 USD0.35

About Author

Kenneth Lamont  is a passive funds research analyst for Morningstar Europe.