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Should You Invest in the iShares U.S. Oil Equipment & Services ETF (IEZ)?

By Zacks Investment ResearchStock MarketsApr 01, 2021 06:20AM ET
www.investing.com/analysis/should-you-invest-in-the-ishares-us-oil-equipment--services-etf-iez-200570752
Should You Invest in the iShares U.S. Oil Equipment & Services ETF (IEZ)?
By Zacks Investment Research   |  Apr 01, 2021 06:20AM ET
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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 equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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 7, placing it in top 44%.

Index Details

The fund is sponsored by Blackrock (NYSE:BLK). It has amassed assets over $366.76 million, making it one of the larger ETFs attempting to match the performance of the Energy - Equipment and services segment of the 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.42%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.47%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 (NYSE:SLB) accounts for about 21.59% of total assets, followed by Halliburton (HAL) and Championx Corp (CHX).

The top 10 holdings account for about 76.65% of total assets under management.

Performance and Risk

The ETF has gained about 18.54% so far this year and is up roughly 129.08% in the last one year (as of 04/01/2021). In that past 52-week period, it has traded between $5.93 and $15.90.

The ETF has a beta of 2.61 and standard deviation of 54.16% for the trailing three-year period, making it a high risk choice in the space. With about 27 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 the best option for investors seeking exposure to the Energy ETFs segment of the market. However, there are better ETFs in the space to consider.

SPDR S&P Oil & Gas Equipment & Services ETF (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 $146.94 million in assets, VanEck Vectors Oil Services ETF has $1.21 billion. 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Schlumberger Limited (SLB): Free Stock Analysis Report

Halliburton Company (NYSE:HAL): Free Stock Analysis Report

VanEck Vectors Oil Services ETF (OIH): ETF Research Reports

ChampionX Corporation (CHX): Free Stock Analysis Report

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Should You Invest in the iShares U.S. Oil Equipment & Services ETF (IEZ)?
 

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Should You Invest in the iShares U.S. Oil Equipment & Services ETF (IEZ)?

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