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Crude oil also known as “black gold”, is the commodity driving the world and providing us with energy. There was a time when oil companies were the most valuable on the globe, but today they are not anymore.

The oil sector experienced boom and bust cycles along the years. This resulted in volatile oil prices as oil barrels peaked in 2008 at $145.31 USD, went down to $34.03 USD in 2009, up again to $113.39 USD in 2011. They reached $100 USD in 2014, a level never reached since then.

Despite the instability, oil prices managed to find their way to new heights. In 2020, oil prices closed the year at $48.52 USD per barrel, but they rebounded in 2021, today they stand at $69.49 USD.

Furthermore, some oil companies increased investors' wealth either through capital gains or dividends.

Oil prices in the last 20 years

Environmental concerns aside, it is safe to say that oil investing is not for everyone. It is important for investors to understand the risks and weigh their choices accordingly.

Investors can gain exposure to the oil sector in different ways. Options range from direct investment in the oil commodity to investments in oil companies, whose share price is closely related to the price of the commodity itself.

In both cases, investors can use Exchange Traded Funds (ETFs) to achieve their investment objectives.

Invest directly in crude oil with Oil Commodities ETFs

Perhaps the most direct way of investing in crude oil is by trading the commodity futures and options. These financial instruments allow investors to profit from the variation in oil prices without owning oil barrels physically. However, they can be highly volatile and entail complexities and higher risks. They may require a certain level of expertise on the investor’s side.

For those who do not want to interact directly with those complex instruments, there are Oil ETFs. These funds provide direct exposure to the oil market. They track the price of the oil commodity while holding a diverse portfolio of oil futures. This saves investors the hassle of navigating futures contracts complexities.

List of Oil ETFs in Canada

Our data reveals that there are three Oil ETFs listed in Canada. As of December 3rd, these funds are managing $145.006 million CAD of AUM and attracted $36.257 million CAD of inflows.

• Horizons BetaPro Crude Oil Leveraged Daily Bull ETF – CAD (HOU): This ETF holds $88.169 million CAD in AUM and returned 68.35% YTD as of December 3rd. It charges 1.15% (plus applicable sales tax) in management fees. The fund seeks daily investment results corresponding to up to two times (200%) the daily performance of the Horizons Crude Oil Rolling Futures Index. HOU is a leveraged ETF and entails higher levels of risks. Learn more about Leveraged ETFs.
• Horizons NYMEX Crude Oil ETF – CAD (HUC): This ETF holds $22.527 million CAD in AUM and returned 42.88% YTD as of December 3rd. It charges 0.75% (plus applicable sales tax) in management fees. The fund seeks to provide exposure to the Solactive Light Sweet Crude Oil Winter MD Rolling Futures Index. It invests exclusively in the futures contracts, Winter-term Crude Oil December 2022. HUC executes its underlying exposure roll once per year in June. These futures contracts trade in USD so HUC hedged to the CAD.
• Horizons BetaPro Crude Oil Inverse Leveraged Daily Bear ETF – CAD (HOD): This ETF holds $34.309 million CAD in AUM as of December 3rd. It charges 1.15% (plus applicable sales tax) in management fees. The fund seeks daily investment results corresponding to up to two times (200%) the inverse of the Horizons Crude Oil Rolling Futures Index’s daily performance. The ETF does not seek to achieve its investment objective over a period greater than one day. These futures contracts trade in USD so HOD hedged back to the CAD. HOD is a leveraged ETF and entails higher levels of risks.

Alternative way of investing in crude oil: Oil Company ETFs 

Investors who do not want to invest in derivatives such as futures and options can go another path and simply buy sector-related companies. Compared with those derivatives, stocks have limited downside (zero) for shareholders, but also limited income prospects as most of the profits get reinvested (hence not distributed). Oil conglomerates and large companies face reputational risks following oil spills and bad press can have a strong impact on your investment’s value.

An easy way to invest in the Oil sector is through Oil Stocks ETFs. They allow investors to spread their risk across a diverse basket of oil securities.

List of Top Oil Company ETFs in Canada:

NEO’s data reveals that there are seventeen Oil Company ETFs listed in Canada. As of December 3rd, these funds are managing $2.252 trillion CAD of AUM and bled $66.275 million CAD of outflows.

Top 10 Oil Company ETFs:

1. Horizons BetaPro S&P/TSX Capped Energy 2x Daily Bull ETF – CAD (HEU): 178.62%
2. Horizons S&P/TSX Capped Energy Index ETF – CAD (HXE): 76.88%
3. iShares S&P/TSX Capped Energy Index ETF – CAD (XEG): 75.62%
4. Horizons Enhanced Income Energy ETF – CAD (HEE): 70.97%
5. BMO Equal Weight Oil & Gas Index ETF – CAD (ZEO): 59.02%
6. CI Energy Giants Covered Call ETF – CAD (NXF.B): 39.38%
7. CI First Asset Energy Giants Covered Call ETF - CAD Hedged (NXF): 37.68%
8. Ninepoint Energy Fund – CAD (NNRG): 34.18%
9. Harvest Energy Leaders Plus Income ETF – USD (HPF.U): 33.50%
10. Horizons Pipelines & Energy Services Index ETF – CAD (HOG): 30.11%