The iShares US Energy (IYE)
XOM Stock Weight: 25%
The fracking revolution has made North America the new champ when it comes to the energy sector. And with its huge 2010 purchase of XTO, Exxon is one of the top “frackers” and natural gas producers in the nation. As such, XOM stocks prominence in many U.S.-shale focused energy ETFs is understandable.
The iShares US Energy (IYE) is no different — except that it has the most exposure to XOM stock out there. Currently, IYE has nearly 25% of its portfolio in XOM. And with just over $1.6 billion in total assets, that means IYE has roughly $385 million riding on the oil stock. That’s more than double the next biggest holding — Exxon rival and integrated super-major Chevron (CVX).
While the fund does spread its remaining 75% of holdings among 85 different energy firms — including a who’s who of North America’s biggest and brightest oil stocks — the truth is the bulk of the oil stocks in IYE only amount to less than 1% each.
IYE isn’t necessarily a bad fund; in fact it could be one of the best ways to play fracking and unconventional drilling. However, with that much riding on XOM stock, investors may want to think twice about adding it if they already own the stock or hold other concentrated funds.