DEFINITION of 'Oil Services Industry ETF'
A sector exchange-traded fund (ETF) that invests in companies engaged in providing services such as drilling and seismic testing to the oil exploration & production (E&P) industry. Oil service companies generally do not produce oil and gas themselves, since their core competency lies in supplying services and associated products to energy producers.
BREAKING DOWN 'Oil Services Industry ETF'
The fortunes of an oil services ETF are closely tied to those of the overall energy industry, whose outlook in turn depends on prices of oil and natural gas. The performance of the oil services sector and related ETFs depends on the current stage of the economic cycle.
By owning an ETF, you get the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, you have to pay the same commission to your broker that you'd pay on any regular order