iShares Dow Jones US Oil & Gas Exp.(ETF) (NYSEARCA:IEO) — This fund seeks to track the results of the Dow Jones U.S. Select Oil Exploration & Production Index by investing in some of the largest and most liquid companies in the sector.
Its top 10 holdings are: ConocoPhillips (NYSE:COP), EOG Resources Inc (NYSE:EOG), which was yesterday’s Trade of the Day, Anadarko Petroleum Corporation (NYSE:APC), Phillips 66 (NYSE:PSX), Valero Energy Corporation (NYSE:VLO), Marathon Petroleum Corp (NYSE:MPC), Apache Corporation (NYSE:APA), Devon Energy Corp (NYSE:DVN), Pioneer Natural Resources (NYSE:PXD) and Marathon Oil Corporation (NYSE:MRO).
Morningstar gives IEO a five-star rating based on the fund’s ability to accurately reflect the performance of the underlying index and the fee charged by management. IEO was able to perform within 0.01% of the one-year and three-year performance of the index and charges a relatively low annual fee of 0.45%.
IEO broke a long-term resistance line on Monday with a breakaway gap through its 50-day moving average at about $70.59. The overall pattern of the breakout is a “W” formation, which is considered by the majority of technicians to be very bullish.
Wednesday’s pullback, on what appears to be normal profit-taking, provides both traders and investors with an opportunity to buy this premier oil and gas ETF at a good value.
The three-month trading target for IEO is its 200-day moving average at about $85, which is 16% above current prices. Investors, however, may want to hold this fund as a cornerstone, long-term investment in the oil and gas sector.
