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Four ETFs For The Canadian Oil Sands


It may be dirty and environmentally controversial, but oil from Canada’s oil sands region is big business. Oil from the western oil sands region of our northern neighbor is commonly referred to “bitumen,” but regardless of its technical designation this oil is a major economic driver for Canada.
Oil from the country’s west has helped Canada become the number one supplier of crude to the U.S., surpassing Saudi Arabia several years ago. Not to be forgotten is the fact that Canada’s oil sands region is home to the second-largest oil reserves in the world behind OPEC member Saudi Arabia.
To be sure, the oil sands investment thesis is a legitimate one and there are several ETFs investors can use to play one of the most dependable and lucrative sources of crude in the world.
iShares MSCI Canada Index Fund (NYSE: EWC): The iShares MSCI Canada Index Fund was recently identified as Standard & Poor’s Equity Research as one country-specific ETF that is useful for investors searching for exposure to a particular sector. EWC delivers with a weight of over 26% to the energy group. If you want exposure to the biggest Canada-based oil sands players, EWC is the way to go.
IndexIQ Canada Small Cap ETF (NYSE: CNDA): For those willing to embrace a little bit more risk in the oil sands, the IndexIQ Canada Small Cap ETF is the way to go. Talk about sector exposure to the relevant oil sands industries, materials and energy names combine for 72% of CNDA’s weight. CNDA is arguably home to a few potential oil sands takeover targets as well.
SPDR S&P International Energy ETF (NYSE: IPW): The SPDR S&P International Energy ETF will probably continue to fly under the radar due to a jittery outlook for global economic growth, but the ETF is a valid oil sands play. Canada accounts for 29.1% of the ETF’s country weight. Four of the ETF’s top-10 holdings are Canadian companies while Royal Dutch Shell (NYSE: RDS-A), BP (NYSE: BP), Total (NYSE: TOT) and Statoil, four of Europe’s largest oil companies, are all included among IPW’s constituents.
iShares Dow Jones Oil & Gas Exploration & Production ETF (NYSE: IEO) We could have exchanged IEO for its rival, the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP), but went with IEO because of higher weights to Occidental Petroleum (NYSE: OXY) and Devon Energy (NYSE: DVN). Those two companies are oil sands players and they account for over 20% of IEO’s weight.


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