There are easier things to do in the ETF business than try to capture investors' attention with a new equity-based oil ETF. Without making the leap to saying this niche of the ETF universe is saturated, it is fair to say that a few ETFs such as the Oil Services HOLDRs (AMEX:
OIH), the Energy Select Sector SPDR (NYSE:
XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:
XOP) enjoy dominant positions in the market.
With that, ETF issuers need to bring something different to the table when they roll out a new oil ETF that focuses on stocks and that's what IndexIQ did last month with the introduction of the IQ Global Oil Small Cap ETF (NYSE:
IOIL), today's “Under The Hood” candidate.
While it is clear by IOIL's name that this is an ETF that will not be heavy on the likes of Exxon Mobil (NYSE:
XOM) or Chevron (NYSE:
CVX), it also doesn't mean you'll be getting involved with an ETF littered with speculative penny stocks that are the subject of audacious claims in those dumb emails so many of us get.
Actually, the weighted averaged market cap of IOIL's 61 constituents is over $3 billion. By definition, small-cap territory ends at $2 billion, so IOIL is perhaps more of a mid-cap play than its title implies.
With a weight of over 6.1%, Sunoco (NYSE:
SUN) is the ETF's top holding and with a market cap of about $4.75 billion. Other top holdings such as Oceaneering International (NYSE:
OII) and Core Labs (NYSE:
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