Exchange-traded funds (ETFs) can offer investors with safer ways to invest their money. Since everything isn’t tied up into just one stock, you are less likely to be impacted by the short-term volatility of a single holding. But it also isn’t common to earn a great return. However, that’s what investors have been getting this year from the Invesco S&P SmallCap Energy ETF (NASDAQ:PSCE).
The fund focuses on U.S. energy companies, which make up at least 90% of its holdings. With 33 stocks in the fund, it isn’t a terribly large ETF but it is rebalanced on a quarterly basis. The largest holding in the fund is PDC Energy (NASDAQ:PDCE), an exploration and production company which accounts for more than 9% of the ETF’s total weight.
Other significant holdings include Range Resources Corporation (NYSE:RRC), Matador Resources Company (NYSE:MTDR), Helmerich & Payne (NYSE:HP), and Southwestern Energy Company (NYSE:SWN), all of which make up at least 7% apiece.
By investing in small caps, investors can take advantage of greater potential upside in these stocks, especially as bullishness returns to the sector. The fund also offers investors a modest yield of 0.38% and has an expense ratio of just 0.29%. With the average holding trading at just 1.6 times book value and 1.3 times revenue, investors also won’t be paying much of a premium for the ETF.
If you are looking to gain some exposure to the oil and gas sector, this fund could be a great way to do so.