Should You Invest in the VanEck Oil Services ETF (OIH)?
Launched on 12/20/2011, the VanEck Oil Services ETF (OIH) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy – Equipment and services segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy – Equipment and services is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.
Index Details
The fund is sponsored by Van Eck. It has amassed assets over $2.26 billion, making it one of the largest ETFs attempting to match the performance of the Energy – Equipment and services segment of the equity market. OIH seeks to match the performance of the MVIS U.S. Listed Oil Services 25 Index before fees and expenses.
The MVIS U.S. Listed Oil Services 25 Index tracks the overall performance of U.S.-listed companies involved in oil services to the upstream oil sector, which include oil equipment, oil services, or oil drilling.
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 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.23%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector–about 94.90% of the portfolio.
Looking at individual holdings, Schlumberger Nv (SLB) accounts for about 19.91% of total assets, followed by Halliburton Co (HAL) and Baker Hughes Co (BKR).
The top 10 holdings account for about 71.57% of total assets under management.
Performance and Risk
The ETF return is roughly 10.77% so far this year and was up about 25.25% in the last one year (as of 04/03/2024). In that past 52-week period, it has traded between $246.78 and $362.30.
The ETF has a beta of 1.84 and standard deviation of 39.88% 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
VanEck Oil Services ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, OIH is an outstanding option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Oil Equipment & Services ETF (IEZ) tracks Dow Jones U.S. Select Oil Equipment & Services Index and the SPDR S&P Oil & Gas Equipment & Services ETF (XES) tracks S&P Oil & Gas Equipment & Services Select Industry Index. IShares U.S. Oil Equipment & Services ETF has $296.43 million in assets, SPDR S&P Oil & Gas Equipment & Services ETF has $336.27 million. IEZ has an expense ratio of 0.40% and XES 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.
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VanEck Oil Services ETF (OIH): ETF Research Reports
Schlumberger Limited (SLB) : Free Stock Analysis Report
Halliburton Company (HAL) : Free Stock Analysis Report
Baker Hughes Company (BKR) : Free Stock Analysis Report
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
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