Crude oil, as the commodity with the largest trading volume globally, occupies a crucial position in the international market and is one of the key factors driving the global economy. Investors who wish to participate in the crude oil market can choose from multiple channels including futures, funds, ETFs, stocks, and options. Among these, crude oil ETFs have become the preferred choice for many retail investors due to their operational convenience and relatively controllable risks.
This article will delve into the operating mechanisms and product characteristics of crude oil ETFs, list specific ETF products in the Taiwan and US stock markets, and introduce other crude oil investment methods to help you comprehensively understand the crude oil investment ecosystem.
What is a Crude Oil ETF? Core Concept Analysis
Crude oil ETFs first appeared in 2005, during a golden period of robust global economic recovery. Contrary to conventional understanding, crude oil ETFs do not hold physical crude oil. Instead, they track crude oil futures prices or specific crude oil indices by investing in derivatives such as crude oil futures, forward contracts, or swaps, thereby indirectly reflecting crude oil market trends.
The convenience of this investment approach lies in the fact that trading is conducted entirely through exchanges, with buying and selling methods identical to ordinary stocks, requiring no complex procedures. As the market has developed, derivative products such as inverse ETFs and leveraged ETFs have emerged, allowing investors to choose 2-3x long or short strategies, with 2x leveraged products being most common. The United States represents the largest market for such derivative ETFs, with inverse ETFs performing in the opposite direction of the underlying index, providing investors with more diverse trading options.
As Taiwan’s only financial product directly related to crude oil investment, this ETF tracks crude oil futures price performance. The investment target is the S&P Goldman Sachs Crude Oil ER Index, with a correlation of 0.923 to crude oil spot prices, enabling effective capture of oil price movements.
Jiekou Brent Oil Positive 2 (00715L)
Issuing Institution: Jiekou Investment Trust
Tracking Benchmark: S&P Goldman Sachs Brent Crude Oil Daily Return Positive 2x ER Index
Management Fee: 1%; Custodial Fee: 0.15%
Current Price: 11.79 TWD
This is Taiwan’s first leveraged ETF tracking a 2x long Brent crude oil futures index benchmark, using the Intercontinental Exchange Brent crude oil futures contract as reference standard, providing investors with leveraged investment and hedging tools.
iShares MSCI Taiwan Index ETF (EWT)
Issuing Institution: iShares (BlackRock)
Tracking Benchmark: MSCI Taiwan 25/50 Index
Total Management Fee: 0.62%
Current Price: 46.63 USD
Though not focused on crude oil, this ETF tracks Taiwan’s market capitalization-weighted index performance, covering the leading 85% of market size, including energy-related industries.
Crude Oil-Related ETFs in the US Stock Market
Energy Select Sector SPDR Fund (XLE)
Issuing Institution: SPDR (State Street)
Tracking Benchmark: Global large-cap integrated oil and natural gas companies
Management Fee: 0.13%
Annual Dividend Yield: 15.57%
Assets Under Management: 8.3313 billion USD
Current Price: 34.62 USD
XLE is composed entirely of US-listed company stocks, with focus on major energy enterprises. Principal holdings include Chevron, ExxonMobil, and ConocoPhillips, all industry-leading integrated energy companies.
iShares Global Energy ETF (IXC)
Issuing Institution: iShares
Tracking Benchmark: Large-cap energy stocks globally
Management Fee: 0.46%
Annual Dividend Yield: 11.88%
Assets Under Management: 690.8 million USD
Current Price: 18.41 USD
This fund tracks the price performance of major energy companies worldwide, with core holdings including ExxonMobil, Chevron, and TotalEnergies among international oil giants.
Global X MLP and Energy Infrastructure ETF (MLPX)
Issuing Institution: Global X
Tracking Benchmark: Oil and natural gas pipeline companies (MLP)
Management Fee: 0.45%
Annual Dividend Yield: 10.1%
Assets Under Management: 506 million USD
Current Price: 7.59 USD
MLPX tracks the Solactive MLP and Energy Infrastructure Index, focusing on midstream oil and natural gas industries. Principal holdings include TC Energy Corp., Enbridge Inc., and Williams Companies among pipeline operators.
Other Crude Oil Investment Methods Explained in Detail
Crude Oil Futures Trading
Crude oil futures are considered the most direct commodity trading method aside from purchasing spot goods, with massive market trading volume. Since most investors cannot store or distribute crude oil, futures have become the primary choice. Futures possess extremely high liquidity but are simultaneously susceptible to market volatility, making oil price predictions difficult.
Market mainstream futures contracts include West Texas Intermediate (WTI) and Brent crude oil, with additional high-sulfur crude oil futures and Dubai Sour crude oil futures traded on the Singapore Exchange. However, crude oil futures contracts involve extraordinarily large trading amounts, featuring high investment thresholds unsuitable for small and medium investors or retail traders.
Crude Oil Stock Investment
Direct investment in crude oil company stocks represents another pathway. Investors must simultaneously monitor global oil price trends and conduct in-depth research on target companies’ production potential, macro energy environment, competitive landscape, and financial conditions to make precise stock selections.
Major crude oil producers in the market include China National Petroleum Corporation (world’s largest refining company), US ExxonMobil, UK-Netherlands Royal Dutch Shell (operator of over 40,000 gas stations globally), UK BP (pioneer in Middle East oil development), and France’s TotalEnergies (deployed across all energy production sectors).
Crude Oil Options Trading
Options trading mechanisms resemble futures but provide greater flexibility. Options allow investors to choose not to fulfill contracts when futures prices underperform expectations, limiting losses to the premium paid, functionally equivalent to purchasing insurance on futures.
Practical example: Assuming current oil price at $30/barrel, anticipating breach of $40/barrel in June with $0.1/barrel premium. Purchase cost is $100 (0.1×1000). If June oil price rises to $45/barrel, executing the contract yields $4,900 profit (45×1000-40-100). Conversely, if price moves oppositely, losses are limited to the $100 premium.
Contracts for Difference (CFD) Overview
Contracts for Difference represent a popular choice for investors. This approach permits traders to use margins and leverage to profit from crude oil price fluctuations without physically holding crude oil. For example, a 5% margin requirement means a $1000 position requires only $50 deposit. CFD trading typically charges no commissions, instead profiting from trading spreads, and is not restricted to standard lot sizes, with minimums as low as 10 barrels.
Important Risk Warning: CFDs are leveraged products with significantly increased risk. Investors must establish take-profit and stop-loss points, strictly manage risk, and avoid catastrophic losses.
Investment Advantages of Crude Oil ETFs
The primary reasons investors incorporate crude oil ETFs into their portfolios are as follows:
Strong Trading Convenience
Crude oil ETFs trade on securities exchanges with operation methods identical to stocks, requiring no separate futures account opening, with streamlined efficient procedures.
Flexible Intraday Trading
Compared to individual stocks, ETFs offer higher liquidity, allowing frequent trading within the same trading day, capturing short-term volatility opportunities, beneficial for dispersing single-asset volatility risk.
Obvious Tax Advantages
Crude oil ETF capital gains taxes are deferred until sale, providing greater tax advantages compared to other fund products.
Relatively Low Costs
ETF trading costs are far lower than physical trading, eliminating custody fees, storage fees, and insurance expenses. Management fees typically range 0.3%-0.4%, saving an average 2%-3% compared to futures and stock investments.
Bidirectional Trading Mechanism
Investors can flexibly conduct long or short operations, managing risk through limit orders and stop-loss points.
Comprehensive Advantage Assessment
Crude oil ETFs combine partial advantages of crude oil futures while featuring relatively lower liquidation risk and relatively accessible investment thresholds. Selecting issuers with large scale and strong capabilities proves most critical, as these institutions possess more comprehensive research systems, sharper market price capture ability, and greater fund safety assurance.
Risk Factors in Crude Oil ETF Investment
The crude oil industry presents abundant return opportunities accompanied by high risks. Crude oil ETF investment requires vigilance concerning the following risks:
Dramatic Oil Price Volatility
International political events and environmental policies exert significant and difficult-to-predict impacts on crude oil markets. For example, 2020’s pandemic causing oil prices to reach negative levels fully illustrates price volatility magnitude.
More Active Futures Trading
Crude oil futures trading volumes far exceed ETFs, attracting larger institutional asset allocations and oil-related enterprises more substantially, potentially resulting in relatively weaker ETF liquidity.
High Investor Experience Requirements
Inexperienced investors lacking understanding of crude oil contract fundamentals face greater risks. Some crude oil ETFs track US small and mid-cap shale gas companies, which face weaker competitiveness and accelerated bankruptcy risk in low oil-price environments, necessitating careful benchmark examination when selecting funds to avoid blind purchases.
High Rolling Costs
ETFs tracking crude oil futures prices face high rolling costs, unsuitable for long-term holding, increasing capital erosion, better suited for medium-term trading.
Crude Oil ETF Investment Strategy Guidelines
Constructing Diversified Investment Portfolios
Crude oil ETFs can be bought and sold like individual stocks, offering multiple strategic selections. To stabilize crude oil positions within investment portfolios, one can reduce downside risk through selling crude oil ETFs. If holding long positions across multiple oil company stocks, selling petroleum ETFs can hedge risk.
Employing Inverse ETF Strategies
Purchasing inverse crude oil ETFs that track inverse performance of crude oil indices suits investors desiring crude oil short positions but constrained by margin limitations. However, inverse ETF risks are extreme; while potentially hedging risk and generating profits during market downturns, rising oil prices may cause total principal loss. Before investing, thoroughly assess risk tolerance and decide cautiously.
初心者向け原油ETF投資：完全ガイドと製品選択
Crude Oil Recognition and Investment Channels
Crude oil, as the commodity with the largest trading volume globally, occupies a crucial position in the international market and is one of the key factors driving the global economy. Investors who wish to participate in the crude oil market can choose from multiple channels including futures, funds, ETFs, stocks, and options. Among these, crude oil ETFs have become the preferred choice for many retail investors due to their operational convenience and relatively controllable risks.
This article will delve into the operating mechanisms and product characteristics of crude oil ETFs, list specific ETF products in the Taiwan and US stock markets, and introduce other crude oil investment methods to help you comprehensively understand the crude oil investment ecosystem.
What is a Crude Oil ETF? Core Concept Analysis
Crude oil ETFs first appeared in 2005, during a golden period of robust global economic recovery. Contrary to conventional understanding, crude oil ETFs do not hold physical crude oil. Instead, they track crude oil futures prices or specific crude oil indices by investing in derivatives such as crude oil futures, forward contracts, or swaps, thereby indirectly reflecting crude oil market trends.
The convenience of this investment approach lies in the fact that trading is conducted entirely through exchanges, with buying and selling methods identical to ordinary stocks, requiring no complex procedures. As the market has developed, derivative products such as inverse ETFs and leveraged ETFs have emerged, allowing investors to choose 2-3x long or short strategies, with 2x leveraged products being most common. The United States represents the largest market for such derivative ETFs, with inverse ETFs performing in the opposite direction of the underlying index, providing investors with more diverse trading options.
Crude Oil ETF Product Overview and Comparison
Crude Oil ETF Products in the Taiwan Market
Yuanta S&P Crude Oil ETF (00642U)
As Taiwan’s only financial product directly related to crude oil investment, this ETF tracks crude oil futures price performance. The investment target is the S&P Goldman Sachs Crude Oil ER Index, with a correlation of 0.923 to crude oil spot prices, enabling effective capture of oil price movements.
Jiekou Brent Oil Positive 2 (00715L)
This is Taiwan’s first leveraged ETF tracking a 2x long Brent crude oil futures index benchmark, using the Intercontinental Exchange Brent crude oil futures contract as reference standard, providing investors with leveraged investment and hedging tools.
iShares MSCI Taiwan Index ETF (EWT)
Though not focused on crude oil, this ETF tracks Taiwan’s market capitalization-weighted index performance, covering the leading 85% of market size, including energy-related industries.
Crude Oil-Related ETFs in the US Stock Market
Energy Select Sector SPDR Fund (XLE)
XLE is composed entirely of US-listed company stocks, with focus on major energy enterprises. Principal holdings include Chevron, ExxonMobil, and ConocoPhillips, all industry-leading integrated energy companies.
iShares Global Energy ETF (IXC)
This fund tracks the price performance of major energy companies worldwide, with core holdings including ExxonMobil, Chevron, and TotalEnergies among international oil giants.
Global X MLP and Energy Infrastructure ETF (MLPX)
MLPX tracks the Solactive MLP and Energy Infrastructure Index, focusing on midstream oil and natural gas industries. Principal holdings include TC Energy Corp., Enbridge Inc., and Williams Companies among pipeline operators.
Other Crude Oil Investment Methods Explained in Detail
Crude Oil Futures Trading
Crude oil futures are considered the most direct commodity trading method aside from purchasing spot goods, with massive market trading volume. Since most investors cannot store or distribute crude oil, futures have become the primary choice. Futures possess extremely high liquidity but are simultaneously susceptible to market volatility, making oil price predictions difficult.
Market mainstream futures contracts include West Texas Intermediate (WTI) and Brent crude oil, with additional high-sulfur crude oil futures and Dubai Sour crude oil futures traded on the Singapore Exchange. However, crude oil futures contracts involve extraordinarily large trading amounts, featuring high investment thresholds unsuitable for small and medium investors or retail traders.
Crude Oil Stock Investment
Direct investment in crude oil company stocks represents another pathway. Investors must simultaneously monitor global oil price trends and conduct in-depth research on target companies’ production potential, macro energy environment, competitive landscape, and financial conditions to make precise stock selections.
Major crude oil producers in the market include China National Petroleum Corporation (world’s largest refining company), US ExxonMobil, UK-Netherlands Royal Dutch Shell (operator of over 40,000 gas stations globally), UK BP (pioneer in Middle East oil development), and France’s TotalEnergies (deployed across all energy production sectors).
Crude Oil Options Trading
Options trading mechanisms resemble futures but provide greater flexibility. Options allow investors to choose not to fulfill contracts when futures prices underperform expectations, limiting losses to the premium paid, functionally equivalent to purchasing insurance on futures.
Practical example: Assuming current oil price at $30/barrel, anticipating breach of $40/barrel in June with $0.1/barrel premium. Purchase cost is $100 (0.1×1000). If June oil price rises to $45/barrel, executing the contract yields $4,900 profit (45×1000-40-100). Conversely, if price moves oppositely, losses are limited to the $100 premium.
Contracts for Difference (CFD) Overview
Contracts for Difference represent a popular choice for investors. This approach permits traders to use margins and leverage to profit from crude oil price fluctuations without physically holding crude oil. For example, a 5% margin requirement means a $1000 position requires only $50 deposit. CFD trading typically charges no commissions, instead profiting from trading spreads, and is not restricted to standard lot sizes, with minimums as low as 10 barrels.
Important Risk Warning: CFDs are leveraged products with significantly increased risk. Investors must establish take-profit and stop-loss points, strictly manage risk, and avoid catastrophic losses.
Investment Advantages of Crude Oil ETFs
The primary reasons investors incorporate crude oil ETFs into their portfolios are as follows:
Strong Trading Convenience
Crude oil ETFs trade on securities exchanges with operation methods identical to stocks, requiring no separate futures account opening, with streamlined efficient procedures.
Flexible Intraday Trading
Compared to individual stocks, ETFs offer higher liquidity, allowing frequent trading within the same trading day, capturing short-term volatility opportunities, beneficial for dispersing single-asset volatility risk.
Obvious Tax Advantages
Crude oil ETF capital gains taxes are deferred until sale, providing greater tax advantages compared to other fund products.
Relatively Low Costs
ETF trading costs are far lower than physical trading, eliminating custody fees, storage fees, and insurance expenses. Management fees typically range 0.3%-0.4%, saving an average 2%-3% compared to futures and stock investments.
Bidirectional Trading Mechanism
Investors can flexibly conduct long or short operations, managing risk through limit orders and stop-loss points.
Comprehensive Advantage Assessment
Crude oil ETFs combine partial advantages of crude oil futures while featuring relatively lower liquidation risk and relatively accessible investment thresholds. Selecting issuers with large scale and strong capabilities proves most critical, as these institutions possess more comprehensive research systems, sharper market price capture ability, and greater fund safety assurance.
Risk Factors in Crude Oil ETF Investment
The crude oil industry presents abundant return opportunities accompanied by high risks. Crude oil ETF investment requires vigilance concerning the following risks:
Dramatic Oil Price Volatility
International political events and environmental policies exert significant and difficult-to-predict impacts on crude oil markets. For example, 2020’s pandemic causing oil prices to reach negative levels fully illustrates price volatility magnitude.
More Active Futures Trading
Crude oil futures trading volumes far exceed ETFs, attracting larger institutional asset allocations and oil-related enterprises more substantially, potentially resulting in relatively weaker ETF liquidity.
High Investor Experience Requirements
Inexperienced investors lacking understanding of crude oil contract fundamentals face greater risks. Some crude oil ETFs track US small and mid-cap shale gas companies, which face weaker competitiveness and accelerated bankruptcy risk in low oil-price environments, necessitating careful benchmark examination when selecting funds to avoid blind purchases.
High Rolling Costs
ETFs tracking crude oil futures prices face high rolling costs, unsuitable for long-term holding, increasing capital erosion, better suited for medium-term trading.
Crude Oil ETF Investment Strategy Guidelines
Constructing Diversified Investment Portfolios
Crude oil ETFs can be bought and sold like individual stocks, offering multiple strategic selections. To stabilize crude oil positions within investment portfolios, one can reduce downside risk through selling crude oil ETFs. If holding long positions across multiple oil company stocks, selling petroleum ETFs can hedge risk.
Employing Inverse ETF Strategies
Purchasing inverse crude oil ETFs that track inverse performance of crude oil indices suits investors desiring crude oil short positions but constrained by margin limitations. However, inverse ETF risks are extreme; while potentially hedging risk and generating profits during market downturns, rising oil prices may cause total principal loss. Before investing, thoroughly assess risk tolerance and decide cautiously.