VanEck has launched a new sector-focused ETF in Europe targeting the largest US-listed companies from the oil services industry.
Martijn Rozemuller, CEO at VanEck Europe
The VanEck Oil Services UCITS ETF has been listed on London Stock Exchange in pound sterling (OIGB LN) and US dollars (OIHV LN) as well as on Deutsche Börse Xetra in euros (V0IH GY).
While the goals of the Paris Agreement are bringing about a long-term fundamental change to the energy sector, VanEck notes that traditional fossil fuels such as petroleum and gas are still expected to play a critical role for decades in managing the gradual transition to a net-zero economy.
Moreover, escalating geopolitical tensions in recent years have highlighted the strategic importance of energy commodities, while the low correlation of oil services companies with the broader equity market showcases these firms’ potential as portfolio diversifiers.
Martijn Rozemuller, CEO at VanEck Europe, said: “As part of the conflict between Russia and Ukraine, energy supplies were used as political leverage. As a result, fossil fuels have become a matter of national security in many countries. Due to higher commodity prices and supply shortages, investments in fossil fuels are making a comeback. Several countries have reconsidered their energy mix, placing increased emphasis back on traditional fossil fuels.”
“Renewable energy sources are in some cases still comparatively difficult to access. Moreover, fossil fuels will potentially be able to compensate and support the electricity grid in those instances when renewable energy cannot be generated, increasing capacity. Solar energy, wind power, and hydrogen currently account for about 5% of total energy consumption, while petroleum accounts for about 30%.”
The ETF is linked to the MarketVector US Listed Oil Services 10% Capped Index which consists of the 25 largest US-listed companies that derive at least 50% of their revenue from oil & gas extraction or providing equipment or services for this purpose.
Constituents are weighted by float-adjusted market capitalization subject to a 10% cap per security. The index is rebalanced on a quarterly basis.
The ETF comes with an expense ratio of 0.35%.