Investment objective
The goal of the iShares S&P/TSX Capped Energy Index ETF (XEG) is to let Canadian investors tap into the energy sector. It aims to mirror the S&P/TSX Capped Energy Index, which showcases how the Canadian energy market is doing.
This ETF includes companies involved in various energy-related activities, like searching for oil, producing energy, and distributing it. By investing in XEG, you can easily and affordably get a mix of different energy companies.
If you’re a Canadian investor interested in the energy industry, including both traditional energy and newer green energy companies, considering XEG could be a smart move. Keep in mind that XEG’s performance closely follows the underlying index, so how the energy sector does will affect how the ETF performs.
Historical performance vs similar funds
It’s impressive to see XEG leading the pack with the lowest fees while delivering outstanding performance. With a YTD return of 8.42%, a 3-year average return of 50.49%, and a 5-year average return of 13.87%, it’s clear that XEG is not just cost-effective but also a powerhouse in the energy sector.
Comparing it to other funds on the table, NXF.TO’s covered call approach indicates a focus on income generation, making it suitable for investors seeking dividends. On the other hand, NNRG.NE, despite being a relatively recent addition, it might be worth exploring further, especially considering its mutual fund version’s track record over time. NNRG invests primarily in mid cap energy stocks (while the other funds are dominated by big player in the energy sector).
The historical performance chart underscores XEG’s consistency and superiority, outperforming its peers like ENCC.TO and ZEO.TO in various time frames. If you value a combination of low fees and strong performance, XEG seems to be the go-to choice for exposure to the energy sector.
While XEG ETF boasts low fees and stellar performance, it’s crucial to note its potential vulnerability due to the heavy concentration in just two stocks, Canadian Natural Resources and Suncor. While these companies may be energy giants, such concentration poses a risk as it leaves the fund exposed to the individual performance of these entities.
Fees
Top 10 holdings
| Ticker | Name | Weight (%) |
|---|---|---|
| CNQ | CANADIAN NATURAL RESOURCES LTD | 26.12 |
| SU | SUNCOR ENERGY INC | 21.45 |
| CVE | CENOVUS ENERGY INC | 11.74 |
| TOU | TOURMALINE OIL CORP | 7.71 |
| IMO | IMPERIAL OIL LTD | 4.97 |
| ARX | ARC RESOURCES LTD | 4.70 |
| MEG | MEG ENERGY CORP | 2.67 |
| WCP | WHITECAP RESOURCES INC | 2.10 |
| CPG | CRESCENT POINT ENERGY CORP | 2.01 |
Sector allocation
| Type | Fund |
|---|---|
| Oil & Gas Exploration & Production | 55.31 |
| Integrated Oil & Gas | 38.16 |
| Oil & Gas Drilling | 5.08 |
| Oil & Gas Equipment & Services | 1.42 |
| Cash and/or Derivatives | 0.03 |
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