Oil Prices Are Rising and Now May Be the Time to Buy This Energy ETF

2021-03-29 03:52:17

(MENAFN- Baystreet.ca) The price of West Texas Intermediate (WTI) has been raising since the start of the year. And it is showing stability at the $60/barrel price point and it could give investors some renewed hope for the industry.

During the pandemic, investors may recall that oil prices even briefly dipped into negative territory. Now, with health officials administering COVID-19 vaccines and a potential end to the pandemic and some sort of normalcy resuming this year, demand for travel could be huge in 2021. And that means oil prices could continue to rise as consumers make up for lost time.

One ETF that energy investors will want to put on their radars is the iShares U.S. Energy ETF (NYSEArca:IYE). It is already up more than 33% to start the year and those gains could be just the start as over the past three years it is still down more than 25%. Its top two holdings make up more than 40% of its assets.

Exxon Mobil (NYSE:XOM) stock accounts for 23% of the fund's weight while Chevron (NYSE:CVX) is not far behind at just under 20%. With a net expense ratio of 0.4%, the ETF isn't terribly expensive and it can give you great exposure to the big names in the oil and gas industry. The fund also yields 3.8%.

If you're expecting a recovery in the economy this year, this ETF could make for a great investment. With an average price-to-book ratio of just 1.3, you don't have to worry about paying much of a premium for these stocks, either.

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