Launched on 05/01/2006, the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Exploration segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Exploration is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $609.15 million, making it one of the larger ETFs attempting to match the performance of the Energy - Exploration segment of the equity market. IEO seeks to match the performance of the Dow Jones U.S. Select Oil Exploration & Production Index before fees and expenses.
The Dow Jones U.S. Select Oil Exploration & Production Index is a free-float adjusted market capitalization-weighted index. The Index includes companies that are engaged in the exploration for and extraction, production, refining, and supply of oil and gas products.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 99.80% of the portfolio.
Looking at individual holdings, Conocophillips (COP) accounts for about 20.12% of total assets, followed by Eog Resources Inc (EOG) and Phillips (PSX).
The top 10 holdings account for about 70.19% of total assets under management.
Performance and Risk
The ETF has added about 8.29% and is up roughly 8.60% so far this year and in the past one year (as of 01/15/2025), respectively. IEO has traded between $85.22 and $111.94 during this last 52-week period.
The ETF has a beta of 1.43 and standard deviation of 29.71% for the trailing three-year period, making it a high risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Oil & Gas Exploration & Production ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IEO is a sufficient option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Invesco Energy Exploration & Production ETF (PXE) tracks Dynamic Energy Exploration & Production Intellidex Index and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) tracks S&P Oil & Gas Exploration & Production Select Industry Index. Invesco Energy Exploration & Production ETF has $108.36 million in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $2.41 billion. PXE has an expense ratio of 0.63% and XOP charges 0.35%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares U.S. Oil & Gas Exploration & Production ETF (IEO): ETF Research Reports
ConocoPhillips (COP) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
Phillips 66 (PSX) : Free Stock Analysis Report
SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports
Invesco Energy Exploration & Production ETF (PXE): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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