The energy sector has been in a bear market and Western Texas Intermediate (WTI) crude oil futures contracts for delivery in December 2015 fell below $40 per barrel on Nov. 18, 2015. The WTI crude oil spot price fell by over 20% per barrel between May 2015 and October 2015. Additionally, the New York Harbor Conventional Gasoline Regular spot price tanked nearly 30% over the same period. With the increasing supply of oil, prices of crude oil may stay depressed until late 2016.

The oil and gas sector is best suited for investors with long-term investment horizons because it is unlikely crude oil prices will stay below $40 forever. Investors have a variety of oil and gas exchange-traded funds (ETFs) to choose from to gain exposure to the energy sector and these commodities. Oil and gas ETFs may provide direct exposure to crude oil and gas, and may hold common stocks of companies in the energy sector.

United States Oil Fund

The United States Oil Fund (NYSEARCA: USO) was issued on April 10, 2006, by The United States Commodity Funds LLC. The fund seeks to provide investment results, before fees and expenses, corresponding to the daily price movements of WTI light, sweet crude oil. As of Nov. 17, 2015, the fund has total net assets of $3.05 billion and 235.4 million shares outstanding.

To provide exposure to WTI crude oil, USO holds near-month crude oil futures contracts traded on the New York Mercantile Exchange. If the near-month WTI futures contract is within two weeks of its expiration date, the fund purchases futures contracts on the commodity expiring the following month. Since the fund must roll its futures contracts 12 times a year, USO charges an above-average total annual net expense ratio of 0.72%, while the average expense ratio of commodities energy funds is 0.57%.

As of Sept. 30, 2015, USO has a one-month return of -7.61%, a three-month return of -26.16% and a one-year return of -57.86%. Highly risk-tolerant investors who seek tactical investments on crude oil futures contracts without having to open futures accounts may look to purchase USO.

United States Natural Gas Fund

The United States Natural Gas Fund LP (NYSEARCA: UNG) was issued by The United States Commodity Funds LLC, on April 18, 2007. UNG is an exchange-traded product that seeks to provide investment results corresponding to the daily percentage movements of the price of natural gas to be delivered at Henry Hub, Louisiana. The fund's benchmark is the front-month natural gas futures contract that trades on the New York Mercantile Exchange. If the front-month contract is within two weeks of its expiration date, the fund's underlying is the natural gas futures contract expiring the following month.

UNG seeks to achieve its investment objective by investing in natural gas futures contracts and natural gas related futures contracts. As of Nov. 17, 2015, UNG has total net assets of $560 million and a trailing three-month average daily volume of 5.76 million shares. Although the fund provides direct exposure to natural gas prices, it has an expense ratio of 1.14%, which is double the average expense ratio of commodities energy funds.

SPDR S&P Oil & Gas Explor & Prodtn ETF

The SPDR S&P Oil & Gas Explor & Prodtn ETF (NYSEARCA: XOP) was issued on June 19, 2006, by State Street Global Advisors. XOP is managed by SSGA Funds Management Inc. and charges an annual expense ratio of 0.35%. As of Nov. 17, 2015, the fund has $1.48 billion in total net assets and a dividend yield of 1.92%.

The fund seeks to provide investment results, before fees and expenses, corresponding to the performance of the S&P Oil & Gas Exploration & Production Select Industry Index, its benchmark index. XOP seeks to achieve its investment objective by implementing a representative sampling strategy and, under normal market conditions, it invests at least 80% of its total net assets in securities comprising the underlying index.

The fund's industry allocations are 74.31% to oil and gas exploration and production; 20.41% to oil and gas refining and marketing; 5.02% to integrated oil and gas; and 0.15% unassigned. Due to the dive in oil prices between 2014 and 2015, XOP has a year-to-date (YTD) return of -21.54% and a one-year return of -37.94% as of November 2015.

Energy Select Sector SPDR ETF

The Energy Select Sector SPDR ETF (NYSEARCA: XLE) was issued on Dec. 16, 1998, by State Street Global Advisors. The fund is managed by SSGA Funds Management, Inc. and charges an annual expense ratio of 0.14%. XLE seeks to provide investment results, before expenses, corresponding to the general price and yield performance of the Energy Select Sector Index, its underlying index.

The fund seeks to achieve its investment objective by investing at least 95% of its total net assets in securities comprising its underlying index. As of Nov. 17, 2015, XLE has total net assets of $12.05 billion and a trailing three-month average daily share volume of 20.02 million. XLE's top five holdings are 16.92% to Exxon Mobil; 13.16% to Chevron; 7.62% to Schlumberger; 4.18% to EOG Resources; and 3.72% to Occidental Petroleum.

As of Oct. 31, 2015, XLE has a YTD of -12.21% and a one-year return of -20.05%. Highly risk-tolerant investors who are bullish on the energy sector for 2016 may look to include XLE in well-diversified portfolios.

United States 12 Month Oil

The United States 12 Month Oil (NYSEARCA: USL) was issued on Dec. 6, 2007, by The United States Commodity Funds LLC. As of Sept. 30, 2015, USL has a one-month return of -10.11%, a YTD return of -23.09% and a one-year return of -51.08%.

Similar to its sister funds, USO and UNG, USL provides direct exposure to its underlying commodity. USL charges a high expense ratio of 0.93%, while the average expense ratio of its category is 0.57%. USL seeks to provide investment results corresponding to the daily percentage changes of the price of WTI crude oil to be delivered to Cushing, Oklahoma.

The fund's underlying, or benchmark, is the front-month futures contract to expire and the contracts for the following 11 consecutive months. If the front-month futures contract is within two weeks of its expiration date, the benchmark is the futures contract expiring the following month and the contracts for the following 11 consecutive months.

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