small caps as stocks in the bottom 10% of the entire oil industry’s market capitalization. The sub-sector breakdown shows Refining & Marketing at 40.5%, Exploration & Production 36.9%, and Equipment, Services & Drilling 22.6%.
The fund’s 61 holdings are weighted by float-adjusted market capitalization. While no stock is supposed to exceed a 10% allocation at the quarterly rebalancing, presently no holdings need to be capped. The largest position is Sunoco Inc (NYSE:SUN) at 6.2%, followed by Oceaneering International Inc (NYSE:OII) 5.3%, Core Laboratories (NYSE:CLB) 5.2%, Tesoro Corp (NYSE:TSO) 4.5%, Petrominerales Ltd (PMGLF) 4.3%, and Alliance Oil Company Ltd (ALLZF) 3.9%.
The IOIL portfolio currently spans 14 countries, including both developed and emerging markets. I was somewhat surprised to see Thailand with the third largest allocation but Russia and Mexico not represented at all. My guess is that this reflects the large size of oil-related companies in those places. The rest of the list was no surprise with the U.S. at 45.1%, Canada 11.7%, Thailand 7.5%, Colombia 4.3%, Japan 4.0%, Sweden 3.9%, U.K. 3.9%, Finland 3.0%, and six others combining for 13.5%.
The only other small-cap energy ETF is PowerShares S&P Small Cap Energy (NYSE:PSCE), but its geographic mandate is narrower. PSCE holds only stocks that are part of the domestically-oriented S&P SmallCap 600 Index.
All in all, IOIL is well-differentiated from the dozens of other energy ETFs and provides a viable new alternative. The fund’s initial expense ratio is 0.75%. Additional information can be found in the press release (pdf), overview page, fact sheet (pdf), and prospectus (pdf).
Written By Ron Rowland From Invest With An Edge No positions in any of the securities mentioned.
Ron Rowland is the founder of Invest With An Edge and serves as the Executive Editor. He is also editor of AllStarInvestor.com and Chief Investment Officer of Capital Cities Asset Management (www.ccam.com). Quoted widely in the financial media, Ron is the industry go-to guy for sector rotation insight and investment strategies using ETFs and mutual funds.