Topic: How To Invest

Q: Pat, I’m thinking of increasing my oil and gas exposure. Do you recommend either the XLE ETF or VDE ETF (each a basket of U.S. energy companies) as a way to do that? Thank you.

Article Excerpt

A: We still feel that investors will profit the most with a well-balanced portfolio of high-quality individual stocks, but ETFs can also play a role in a portfolio. Here’s a look at the ETFs you’ve asked about: Energy Select Sector SPDR ETF, $83.70, symbol XLE on New York (Units outstanding: 424.4 million; Market cap: $35.5 billion; www.ssga.com), provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries. The fund’s MER is just 0.10%. The ETF yields 3.6%. However, its distribution payout and yield could drop if oil and gas prices enter a declining trend. The ETF holds mostly high-quality stocks, but you should note that Chevron makes up a high 17.4% of its assets, and Exxon Mobil comprises an even greater 22.8%. That carries risk. Vanguard Energy ETF, $116.41, symbol VDE on New York (Units outstanding: 68.5 million; Market cap: $8.0 billion; investor.vanguard.com), holds companies involved in the exploration and production of energy products such as oil, natural…