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7 Energy ETFs to Buy for Oil’s Comeback

By U.S. News & World Report

ETFs provide options for investors with varied tactics.

The U.S. is starting to see the onset of inflation in 2018. One way investors can profit from inflationary trends is to get exposure to raw materials that will be rising in price, such as crude oil. Prices for oil have gone from less than $50 a barrel last year to highs of around $70 a barrel in 2018, meaning bigger profits for the companies that pump this fossil fuel out of the ground or bring it to market. For investors who want insulation from inflationary trends or simply like the outlook for energy, here are a seven exchange-traded funds that could give direct exposure to the oil sector.

Energy Select Sector SPDR Fund (ticker: XLE)

The largest energy ETF out there is the XLE, with a massive $17.5 billion in assets under management. This is a great place to start if you’re looking at investing in the energy sector, with the fund holding a piece of the biggest names in the sector, including giants Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX). Note this fund is weighted based on market capitalization, however, and more than 70 percent of assets are allocated in the top 10 positions. That means a small sliver of the sector could be the deciding factor in your performance, instead of a truly broad mix of energy companies.

Guggenheim S&P 500 Equal Weight Energy ETF (RYE)

With just 31 holdings as of this writing, the RYE strives for a roughly 3.2 percent weighting for each position, and rebalances its portfolio quarterly with that aim in mind. In one way, this is a clear advantage to those who want diversification across the energy sector. However, it’s worth noting that such a small list of stocks is not without its risks — particularly since the ETF tends to focus on very similar names in big oil that tend to move as a group. In other words, simply having an equal share in more stocks doesn’t mean you’re truly diversified. It is a sector-focused fund, after all.

Global X China Energy ETF (CHIE)

One way to truly look beyond the conventional holdings of most mainstream energy ETFs is to look outside of the U.S. That’s what the CHIE does, by putting a global twist on the conventional large-cap energy funds that are so common. Top holdings include state-owned oil giant China Petroleum & Chemical Corp. (SNP), better known as Sinopec, and the Hong Kong and China Gas Co. These megacaps are in many ways the Asian equivalent of domestic big oil stocks, and may provide a nice geographic diversification to energy portfolios — particularly given all the talk of a trade war in 2018.

iShares U.S. Oil & Gas Exploration & Production ETF (IEO)

Another way to slice up the energy sector is focus on the explorers — that is, the smaller companies that find new energy fields and pump crude oil and natural gas. The IEO includes companies that are higher risk because they depend on access to new supplies and the dynamics of global fossil fuel prices. These kinds of companies can include ConocoPhillips (COP) and mid-cap names like Andeavor (ANDV). They make up the first link in the energy supply chain, and are the best way to play a resurgence in crude oil prices. Just remember they may be first to take a hit if oil prices roll over.

PowerShares S&P SmallCap Energy Portfolio (PSCE)

Another more aggressive tactic is to go after the smaller players across the energy sector. The PSCE is a PowerShares fund with stocks less than about $3 million in market capitalization, and thus is focused on the less entrenched and more agile players in the space. Holdings that include smaller exploration firms PDC Energy (PDCE) and SRC Energy (SRCI) are certain to be the highest fliers in any uptrend as they can quickly adapt to changing conditions. If you’re OK with a bold bet on energy, there is perhaps no better focused fund on the space than this one.

John Hancock Multi-Factor Energy ETF (JHME)

The previous funds are limited in some way by a specific structure and focus — either size, geography or sub-sector within the broader industry of energy. JHME instead applies a filter based on subjective metrics that include profitability measures like margins or valuation metrics like price-earnings ratio. This is admittedly a boutique fund, with a much smaller base of assets and a flavor of an actively managed fund. But it is an interesting alternative to plain vanilla sector funds in the energy space, and perhaps a safer bet if you believe not all stocks in the oil patch should be sorted simply.

USCF United States Oil Fund (USO)

There’s nothing that says you have to invest in stocks at all to play the energy sector. That’s where the USO comes in, with an exchange-traded offering benchmarked to crude oil itself. Specifically, the fund trades short-term crude oil futures for West Texas Intermediate light, sweet crude oil. There are several different measures for oil prices, but this is one of the most commonly used and referenced on the nightly news. The good news is that you don’t have to worry about reading SEC filings or consider stock valuation metrics. But that may be cold comfort if oil prices decline.

More from U.S. News

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7 Energy ETFs to Buy for Oil’s Comeback originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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