BP’s Disaster Could Send Capital Flowing Into Small Cap Energy ETFs (WCAT, OOK, XLE)

“The Oklahoma Exchange Traded Fund (NYSE:OOK) is a way to access domestic, small-cap energy stocks. A couple months later, Jefferies came out with the Jefferies TR/J CRB Wildcatters Exploration & Production Equity ETF (NYSE:WCAT). The big story with the Oklahoma Exchange Traded Fund — in addition to the smaller exposure that an investor can get through the Energy Select Sector SPDR (NYSE:XLE) — is that it provides more volatility, which, at times, is a good thing. While the Oklahoma fund has been a little more volatile and outperformed the Energy Select Sector SPDR, the Wildcatters fund has been even more volatile and a better performer,” Roger Nusbaum Reports From The Street.

Nusbaum goes on to say, “Since the Wildcatters fund debuted in January, it’s up 1.1% versus a decline of 0.4% for the Oklahoma fund and a drop of 8.8% for the Energy Select Sector SPDR. There are two reasons for the outperformance of the smaller-cap energy ETFs. From the top down, small-cap stocks have done better coming out of the massive stock-market decline. Looking a little closer, the Wildcatters ETF is 67% invested in U.S. companies and 33% in Canadian. At the industry level, 64% is in natural gas and 32% in oil.”

“The Gulf spill is the biggest story in the world now, yet we don’t know the consequences — environmentally or fundamentally — for the industry. This uncertainty could turn out to be a big catalyst for the Wildcatters fund. One plausible result is that BP (NYSE:BP) will no longer be able to do business in the U.S. In addition, the political fallout has called into question the viability of deepwater drilling. For sure, there will be more regulations and steeper drilling costs. That may result in more investment capital flowing into smaller energy companies, which would benefit the Wildcatters ETF,” Nusbaum Reports.

Here are some more details on the 3 Energy related ETFs for you to take a look at below:

Oklahoma Exchange Traded Fund (NYSE:OOK)

The fund will normally invest at least 90% of total assets in stocks that comprise the SPADE® Oklahoma Index.

Company Symbol % Assets
Chesapeake Energy Corporation C (CHK) 6.2
Continental Resources, Inc. Com (CLR) 6.16
Devon Energy Corporation Common (DVN) 6.16
Helmerich & Payne, Inc. Common (HP) 3.77
Magellan Midstream Partners L.P (MMP) 4.1
OGE Energy Corporation Common S (OGE) 3.19
Oneok Partners, L.P. Common Sto (OKS) 5.32
ONEOK, Inc. Common Stock (OKE) 4.16
Williams Companies, Inc. (The)( (WMB) 6.17
Williams Pipeline Partners LP C (WMZ) 3.02

Chart forOOK ETF (OOK)

Jefferies TR/J CRB Wildcatters Exploration & Production Equity ETF (NYSE:WCAT)

The Fund, using a low cost “passive” or “indexing” investment approach, seeks to replicate, before fees and expenses, the performance of the Underlying Index. The Fund will normally invest at least 80% of its total assets in the equity securities that comprise the Underlying Index and depositary receipts based on the securities in the Underlying Index. The Fund has adopted a policy that requires the Fund to provide shareholders with at least 60 days notice prior to any material change in this policy. The Board of Trustees of the Trust may change the Fund’s investment strategy and other policies without shareholder approval, except as otherwise indicated.

Chart forJefferies TR/J CRB Wildcatters Exp&Pr Eq (WCAT)

Energy Select Sector SPDR (NYSE:XLE)

The investment includes companies from the following industries: oil, gas, energy equipment & services. The fund will normally invest at least 95% of its total assets in common stocks that comprise the relevant Select Sector Index. The Funds have adopted a policy that requires each fund to provide shareholders with at least 60 days notice prior to any significant material change in a fund’s policy or its underlying index. It is nondiversified.

Company Symbol % Assets
Anadarko Petroleum Corporation (APC) 3.03
Apache Corporation Common Stock (APA) 3.39
Chevron Corporation Common Stoc (CVX) 13.36
ConocoPhillips Common Stock (COP) 4.74
Devon Energy Corporation Common (DVN) 3.19
Exxon Mobil Corporation Common (XOM) 18.5
Halliburton Company Common Stoc (HAL) 2.75
Occidental Petroleum Corporatio (OXY) 4.88
Schlumberger N.V. Common Stock (SLB) 6.91
XTO Energy Inc. Common Stock (XTO) 2.67

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