Megaphone icon ETF Database is now VettaFi. Read More >
ETFdb Logo
ETFdb Logo
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • Entrepreneur ETF
    • Equity ETF
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Future ETFs
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Modern Alpha
    • Multi-Asset
    • Multi-Factor
    • Nasdaq Investment Intelligence
    • Portfolio Strategies
    • Retirement Income
    • Smart Beta
    • Thematic Investing
    • Volatility Resource
  • Database
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
    • ETFs Future-Forward 2021: An iShares Investing Symposium
    • Three Themes for 2021: An iShares & MSCI Investing Symposium
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Videos & Podcasts
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Beyond Basic Beta Channel
  2. OIH Beneficiary of Rising Oil Prices
Beyond Basic Beta Channel
Share

OIH Beneficiary of Rising Oil Prices

Tom LydonFeb 10, 2022
2022-02-10

The momentum established by the energy sector last year is carrying over into 2022 as the group again ranks near the top among the 11 S&P 500 sectors.

Predictably, that’s a boon for oil services equities and exchange traded funds, such as the VanEck Vectors Oil Services ETF (OIH B+). After returning 21.3% in 2021, OIH is higher by 27.28% year-to-date, reminding investors that oil services stocks are highly correlated to crude prices.

In fact, the relationship of OIH components to oil prices is one of the primary factors that drive the ETF’s performance, and that’s something investors should not overlook.

“Because of this relationship, oil services, and thus OIH, have historically had a higher correlation and beta to oil prices than other more diversified sub-industries such as integrated companies or downstream segments such as refining. However, while the oil service industry is certainly dependent on oil prices, it is not the only factor,” writes Coulter Regal, VanEck associate product manager.

OIH follows the MVIS® US Listed Oil Services 25 Index (MVOIHTR), and while the ETF won’t deliver returns that exactly mirror those of spot oil prices, it is a credible equity-based avenue for investors looking for crude-correlated exposure because when oil prices are high, producers tend to spend more on the services and technologies provided by OIH member firms.

In addition to being a valid play on oil prices, OIH offers other benefits as well. Those include inflation protection, which makes sense because natural resources stocks historically perform well against the backdrop of rising consumer prices.

“One of the primary benefits is inflation protection. Energy-related equities, such as oil services companies, have historically performed well in inflationary economic environments, which has become a growing concern for many investors of late,” adds Regal. “Another benefit is participation in global growth. Commodities and natural resources equities (including oil services) may allow investors to participate in global growth as demand increases for energy worldwide.”

OIH’s utility as an inflation-fighting tool is confirmed by the fund’s inclusion in the VanEck Inflation Allocation ETF (RAAX). As its name implies, RAAX is designed to provide investors with exposure to a broad basket of investments that have reputations for proving durable when inflation runs hot. OIH accounts for 3.11% of the actively managed fund’s weight.

Oil services exposure “may potentially help provide some of the benefits highlighted in the above question such as inflation protection, participation in global growth as well as diversification. Additionally, because of its targeted exposure and liquidity, OIH can also be used tactically by investors to express a short- or long-term view with a highly liquid, low-cost ETF,” concludes Regal.

For more news, information, and strategy, visit the Beyond Basic Beta Channel.

Loading Articles...
Help & Info
  • Contact Us
  • Mission Statement
  • Press
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © ETF Flows LLC
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

Equity ETF Channel

Retirement Portfolio Redux: Is the 60%-40% Portfolio Dead?

Debbie CarlsonOct 22, 2020
2020-10-22

With the 10-year U.S. Treasury yield hovering below 1% and Federal Reserve Chairman Jerome Powell...

Equity ETF Channel

Portfolio Diversification Isn't Dead, It Was Just Sleeping

Debbie CarlsonOct 15, 2020
2020-10-15

Investors could be forgiven to think there was no reason to invest outside of the U.S. for the...

}
X