Both XOP and IEO offer investors solid exposure to oil and gas producers, while shunning the super majors; they just do it in different ways.
They're also more volatile than XLE—unlike another energy-related fund that investors put capital into last week, the Alerian MLP ETF (NYSE Arca: AMLP).
AMLP is a fund that holds the stocks of energy-related master limited partnerships (MLPs), or "toll road" style firms that tend to operate midstream businesses, as opposed to oil and gas production. In particular, AMLP holds energy infrastructure plays: Think pipeline operators, storage terminal operators and the like.
Because an MLP's revenues depend only on the volume of a commodity passing through its operations and not the price of the underlying commodity itself, the asset is seen as a less volatile play on rising energy demand. MLP yields tend to be high and stable, making them attractive for income-minded investors. Recent fund inflows suggest that investors looking for higher-yield, more-conservative exposure to the energy sector seem to be turning to MLPs with interest; our April 8 Commodity ETF Flows report revealed that just two weeks ago, investors had piled $191 million into the JPMorgan Alerian MLP ETN (NYSE Arca: AMJ) as well.
As we examine the fund flows data each week, we will try to spot more interesting trends and investment ideas worth contemplating. Tune in this Friday for our next report.
If you liked this article, then check out: