State ETFs Could Be Interesting Ways To Play Energy (OOK, TXF)

When Geary Advisors introduced the Oklahoma ETF (NYSE: OOK) and the Texas ETF (NYSE: TXF) a couple of months ago, the idea of state-specific ETFs appeared novel if nothing else, but some investors scoffed at the high expense ratios.

Geary Advisors has lowered expenses on both ETFs to 0.20%, but that isn't the primary reason to look at them. Consider that natural gas stocks are getting more and more attention in the wake of Exxon Mobil's (NYSE: XOM) $41 billion acquisition of XTO Energy (NYSE: XTO).

Names like Chesapeake Energy (NYSE: CHK), Continental Resources (NYSE: CLR), and Devon Energy (NYSE: DVN) are among the top holdings in OOK and Anadarko Petroleum (NYSE: APC). Apache (NYSE: APA) and EGO Resources (NYSE: EOG) are all constituents in TXF.

Many of these names have been mentioned as possible targets in future nat-gas mergers and acquisitions. While that should not be a deciding factor in purchasing either ETF, investors can get exposure to these names along with solid sector diversification, particularly with TXF.

So while some folks laughed at the idea of state ETFs when they made their respective debuts, the joke may be on them as the natural gas sector heats up.

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