There is certainly more than one energy exchange traded fund that is worth owning right now. After, there are number of inverse energy ETFs that have surged as oil prices and equities have tumbled.
However, for the investor looking for plain, long energy equity exposure via an ETF that has a credible chance of performing well in the near-term, options have been limited until Wednesday's debut of the Market Vectors Oil Refiners ETF (NYSE: CRAK), the first dedicated refiners ETF.
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Refiners benefit when oil prices slide due to lower crack spreads, perhaps the inspiration for CRAK's ticker, and the few ETFs with robust refiners exposure have been noticeably less bad this year than traditional equity-based energy sector counterparts.
However, because there has not been a dedicated refiners ETF prior to today, that is all the refiners-heavy ETFs have been: Less bad.
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CRAK tracks the Market Vectors Global Oil Refiners Index (MVCRAKTR), a modified market cap-weighted index intended to track the performance of the largest and most liquid companies in the global oil refining segment, according to Market Vectors.
The new ETF holds 26 stocks, including several familiar names, such as Marathon Petroleum Corp. (NYSE:MPC), Phillips 66 (NYSE:PSX), Valero Energy Corp. (NYSE:VLO) and Tesoro Corp. (NYSE:TSO). That quartet combines for over a third of CRAK's weight. After those four stocks, just four of CRAK's remaining 22 holdings are U.S.-based companies.
The profitability of refiners is generally influenced by the spread between the cost of crude oil and the prices at which refined products can be sold, commonly known as crack spreads, said Brandon Rakszawski, product manager at Van Eck Global, in a statement. Oil refiners have tended to react differently to the price of oil compared to other energy sector companies. Historically, the return profile is differentiated from other segments of the sector, a trend that has persisted year-to-date.
In a testament to the strength of refiners in a low oil price environment, Phillips 66 has been the worst performer this year among CRACK's top four holdings with a gain of almost 13 percent. Tesoro has been the top performer of that quartet with a gain of nearly 41 percent. There are seven sub-industries represented in the S&P Global Energy 1200 Index and over the past year refining and marketing is the only one of the seven that has traded higher, according to Market Vectors data.
CRAK charges 0.59 percent per year, or $59 per $10,000 invested.
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