Should You Invest In The IShares U.S. Oil Equipment & Services ETF (IEZ)?

Launched on 05/01/2006, the iShares U.S. Oil Equipment & Services ETF (IEZ) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Equipment and services segment of the U.S. equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Equipment and services is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.

Index Details

The fund is sponsored by Blackrock (NYSE:BLK). It has amassed assets over $243.62 M, making it one of the average sized ETFs attempting to match the performance of the Energy - Equipment and services segment of the U.S. equity market. IEZ seeks to match the performance of the Dow Jones U.S. Select Oil Equipment & Services Index before fees and expenses.

The Dow Jones US Select Oil Equip & Serv Ind is a free-float adjusted market capitalization-wghtd index. It measures the performance of oil equipment & services sector of US equity market by including companies that are suppliers of equipment or services to oil fields & offshore platforms, such as drilling, exploration, engineering, logistics, seismic information services & platform construction.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.44%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.24%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.

Looking at individual holdings, Schlumberger Nv (SLB) accounts for about 15.17% of total assets, followed by Halliburton (HAL) and Baker Hughes Class A (BHGE).

The top 10 holdings account for about 59.51% of total assets under management.

Performance and Risk

Year-to-date, the iShares U.S. Oil Equipment & Services ETF has added roughly 7.96% so far, and is up about 8.10% over the last 12 months (as of 05/15/2018). IEZ has traded between $29.67 and $40.30 in this past 52-week period.

The ETF has a beta of 1.24 and standard deviation of 31.91% for the trailing three-year period, making it a high risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.

Alternatives

IShares U.S. Oil Equipment & Services ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IEZ, then, is not a great choice for investors seeking exposure to the Energy ETFs segment of the market. Instead, there are better ETFs in the space to consider.

SPDR S&P Oil & Gas Equipment & Services ETF (NYSE:XES) tracks S&P Oil & Gas Equipment & Services Select Industry Index and the VanEck Vectors Oil Services ETF (OIH) tracks MVIS U.S. Listed Oil Services 25 Index. SPDR S&P Oil & Gas Equipment & Services ETF has $398 M in assets, VanEck Vectors Oil Services ETF has $1.83 B. XES has an expense ratio of 0.35% and OIH charges 0.35%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.