4 ETF Winners And Losers With Oil Below $70

As oil attempts to find a bottom in the mid-$60s per barrel range, it has majorly impacted companies and countries around the world. Like any big move in the stock market, there will be winners and losers.

Below is a look at the ETFs that will potentially prosper and those that will potentially struggle with oil trading below $70.

Transportation

The iShares Dow Jones Transport. Avg. (ETF) IYT initially rallied to a new all-time high as oil was falling, but the big drop in the price of the commodity last week took its toll on the ETF.

While airline stocks are winners of lower oil prices due to the high cost to fly a plane, the railroads could be losers as less U.S. oil is moved around the country if production slows. Airlines make up 15 percent of the portfolio, with the railroad stocks accounting for 26 percent. There is another 41 percent in the trucking and delivery services sectors that will also benefit from lower fuel costs. Net-net, the ETF should do well with lower oil prices.

Russia

The Market Vector Russia ETF Trust RSX has been decimated from the international sanctions against the country, and the recent decline in oil has added to the carnage. The country’s currency, the ruble, has hit new all-time lows as the price of oil is breaking down.

Related Link: Russian Ruble Hits A Record Low

With a heavy reliance on revenue from energy commodities, Russia will continue to struggle until oil finds a bottom. The ETF has 42 percent of its assets in the energy sector, which has led to a 35 percent decline in its value this year.

FTSE/Xinhua China

The iShares FTSE/Xinhua China 25 Index (ETF) FXI is trading at a two-month high and part of that can be attributed to lower oil prices. The country is the world’s second-largest importer of oil and lower prices could help stave off a slowdown in the country’s economy as they stockpile oil at low prices.

The government intervention in attempting to set up a soft landing is also adding to the bullish tone for the ETF.

Unconventional Oil & Gas

The Market Vectors Unconventional Oil & Gas ETF FRAK has now lost nearly 20 percent in 2014 after hitting a historic high earlier this year. The ETF that focuses on energy stocks involved in fracking and other unconventional niche energy sectors could feel the brunt of lower oil prices.

Due to heavy debt loads of some of the stocks in the portfolio and the fact oil is below the breakeven level for getting oil out of the ground, this energy ETF is the most likely to continue underperforming.

The ETF analysis above assumes oil stays below $70 per barrel for the near-term. Due to heavy volatility and potential moves by OPEC in the coming months, the price of oil will likely continue on the roller coaster that began earlier this year.