SPDR Oil & Gas Equipment & Services ETF (XES)

[OilStockReport]

With the increase in technological advances in Oil Services specialization is increasingly the order of the day. From deep water to reworks each company can have a very unique place within the industry and sometimes on the same project. This is why investment in the service end of oil extraction takes on its own unique character. To ensure that you stay current with the next big tech and that is in the right neighborhood, on land or under the ocean, you have to spread your investment among the many different companies that do some very different things.

Author Matt McCall makes comes to a pretty good conclusion in his recent look at Oil Services ETFs.

Still, better performance can be found in the SPDR S&P Oil & Gas Equipment and Services ETF (XES). The ETF also has the group’s lowest expense ratio at 0.35 percent.

XES is composed of 27 stocks, with just 41 percent allocated to the top ten stocks. What’s more, the largest holding, Weatherford (WFT), only accounts for 4 percent of the allocation. That gives the ETF the best diversification bang-for-your-buck in our pool.

With an acceptable P/E ratio of 17.7, XES is up 27 percent in 2010. The ETF has also done well long-term; since 2007, XES has gained 22 percent, just behind IEZ and easily beating the other two choices.

So when all factors are taken into consideration, IEZ is clearly the best choice in the sector.