Ways To Make An Oil ETF Investment | Penny Stocks

Posted on 16 April 2012. Tags: How To Invest In an Oil ETF, Oil ETF, Oil ETF Investments, Oil ETFs

An Oil ETF Investment Must Take Into Account Many Factors

Investing in an oil ETF is one of the most complicated commodity exchange traded fund (ETF) investments that investors can choose from.? The reason why investing in an oil ETF is complicated is because the price of oil is influenced by a wide variety of factors and forces from around the world, which in turn affects the price of an oil ETF.

An oil ETF can include a number of different investment approaches, from investments in oil producing and distribution companies like Exxon-Mobil to investments in oil futures contracts.? There are benefits and drawbacks to each kind of oil ETF that is available.

No matter what kind of oil ETF an investor decides to invest in, world events that affect the price of oil are likely to affect the price of any oil ETF.? The price of an oil ETF can be influenced by many factors that can cause the price oil trades at in the futures markets to change suddenly, including but not limited to:? changes in supply, changes in demand, changes in governments, changes in government policies, wars, strikes, among others.

Ways To Make An Oil ETF Investment

An example of an oil ETF that derives its value from major diversified oil company stocks and financial securities is the iShares MSCI Global Energy Producers Fund (FILL).? FILL invests in stocks and financial securities that generally correspond to the price and yield performance, before fees and expenses, of the MSCI ACWI Select Energy Producers Investable Market Index. ?FILL offers exposure to major oil companies, such as Exxon Mobil, Chevron, BP, and Royal Dutch Shell.

An example of an oil ETF that derives its value from oil commodity futures is the iPath S&P GSCI Crude Oil TR Index ETN (OIL).? The price of OIL corresponds to the performance of the Goldman Sachs Crude Oil Return through unleveraged investments in futures contacts that comprise the index. ?OIL?s valuation is based on West Texas Intermediate (WTI) crude oil futures contracts traded on the New York Mercantile Exchange (NYMEX).

An example of an oil ETF that derives its value from oil services sector company stocks and financial securities is the Market Vectors Oil Services ETF (OIH).? OIH tries to replicate the performance, before fees and expenses, of the Market Vectors United States Listed Oil Services 25 Index. ?OIH invests in common stocks and depositary receipts of companies in the oil services sector, which includes companies that provide oil drilling and oil production services, oil field equipment, and general support services to the oil industry.

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