Energy ETF

AAA

DEFINITION of 'Energy ETF'

A broad class of ETFs that includes funds focused on oil and gas exploration; the generation, distribution and retail sale of gas and other refined products; electric utilities and alternative energy production. Energy ETFs may invest in only United States-based companies, globally based energy companies, or a blend of the two.

INVESTOPEDIA EXPLAINS 'Energy ETF'

The offerings within the energy ETF class include replications of the energy-sector stocks found in the S&P 500, U.S. energy producers, global energy producers and funds of a particular sub-sector designation, such as nuclear, coal, gas, etc. The weighting of stocks within these ETFs can be market-cap based, equally-weighted or fundamentally weighted, based on financial metrics like net earnings and dividend yield.

Energy ETFs represent a sector that is widely held by both conservative and risky investors, because energy represents a large portion of the broad economy. This is evidenced by energy's high percentage allocation within broad market averages like the S&P 500.

Energy ETFs have the advantage of intraday pricing and trading, which can make them more attractive than similarly invested mutual funds. Investors should read the fact sheets and prospectuses carefully to be sure of what guidelines an ETF has with regards to similar focus areas, such as mining and commodities.

RELATED TERMS
  1. T. Boone Pickens

    One of America's foremost oil and gas entrepreneurs, T. Boone ...
  2. Billions Of Cubic Feet Equivalent ...

    A natural gas industry term typically used to measure the amount ...
  3. Sector ETF

    A class of exchange-traded fund that invests in the stocks and ...
  4. Sector Rotation

    The action of a mutual fund or portfolio manager shifting investment ...
  5. Standard & Poor's 500 Index - S&P ...

    An index of 500 stocks chosen for market size, liquidity and ...
  6. Energy Derivatives

    A derivative instrument in which the underlying asset is based ...
Related Articles
  1. An Introduction To Sector ETFs
    Mutual Funds & ETFs

    An Introduction To Sector ETFs

  2. Clean Or Green Technology Investing
    Investing

    Clean Or Green Technology Investing

  3. ETFs Provide Easy Access To Energy Commodities
    Mutual Funds & ETFs

    ETFs Provide Easy Access To Energy Commodities

  4. Five Companies Leading The Green Charge
    Personal Finance

    Five Companies Leading The Green Charge

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center