Is Investing in the iShares U.S. Oil & Gas Exploration ETF (IEO) Worth It

Explore the potential benefits and risks of investing in the IEO ETF for energy sector exposure

Is Investing in the iShares U.S. Oil & Gas Exploration ETF (IEO) Worth It
Is Investing in the iShares U.S. Oil & Gas Exploration ETF (IEO) Worth It

New York: The iShares U.S. Oil & Gas Exploration & Production ETF, or IEO, launched back in 2006. It’s designed to give investors a broad look at the energy exploration sector. This ETF is a solid pick for long-term investors, especially since it’s popular among both retail and institutional investors. Why? Well, it’s got low costs, is transparent, and offers flexibility.

Sector ETFs like IEO are great because they let you invest in a whole group of companies without putting all your eggs in one basket. Right now, the energy exploration sector is ranked in the bottom 44% of Zacks’ classifications, which is something to keep in mind.

Blackrock sponsors this fund, and it has over $609 million in assets. That makes it one of the bigger players in the energy exploration ETF space. IEO aims to match the performance of the Dow Jones U.S. Select Oil Exploration & Production Index, which includes companies involved in oil and gas exploration and production.

When you’re looking at ETFs, the expense ratio is key. IEO has a low annual operating expense of 0.40%, which is pretty good. Plus, it offers a 12-month trailing dividend yield of 2.42%, which is a nice bonus for investors.

Even though ETFs spread out risk, it’s still smart to check out what’s in the fund. IEO is heavily invested in the energy sector, with about 99.80% of its portfolio there. The top three holdings are Conocophillips, EOG Resources, and Phillips 66, making up a significant chunk of the assets.

In terms of performance, IEO has seen an increase of about 8.29% this year. It’s traded between $85.22 and $111.94 over the past year. However, it does come with some risk, as indicated by its beta of 1.43 and a standard deviation of 29.71% over the last three years.

If you’re considering IEO, it’s rated a Zacks ETF Rank of 3, which means it’s a hold. There are also other options out there, like the Invesco Energy Exploration & Production ETF and the SPDR S&P Oil & Gas Exploration & Production ETF, which you might want to check out.

In the end, if you’re curious about ETFs, it’s worth doing some research to find the right fit for your investment goals. You can also sign up for Zacks’ free Fund Newsletter for the latest updates and insights.

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