SA Asks: What's the best energy ETF right now?

[Rise in gasoline prices concept with double exposure of digital screen with financial chart graphs and oil pumps on a field.]
peshkov

What's the best energy ETF right now for investors?

Seeking Alpha analysts Power Hedge [https://seekingalpha.com/author/power-hedge], Andrew Hecht [https://seekingalpha.com/author/andrew-hecht], and Long Player [https://seekingalpha.com/author/long-player] weigh in.

Power Hedge [https://seekingalpha.com/author/power-hedge]: The best opportunities in energy right now are in midstream. Low oil prices pressure the profits of upstream companies, particularly in shale, and it's unlikely that we will see much upside from upstream producers until prices get back above $80/bbl and stay there. Meanwhile, midstream companies are continuing to grow, and their cash flows are not dependent on energy prices.

Alerian MLP ETF (AMLP [https://seekingalpha.com/symbol/AMLP]) is the best known of the midstream energy ETFs, but ETFs such as Tortoise North American Pipeline Fund ETF (TPYP [https://seekingalpha.com/symbol/TPYP]) that include both midstream partnerships and corporations may prove to be a better holding. TPYP has outperformed AMLP over the past three years, even when we take distributions into account, and its proprietary index that is weighted in favor of natural gas versus oil could prove to be an advantage in the challenging near-term environment for energy. Natural gas does have somewhat better fundamentals, after all.

Andrew Hecht [https://seekingalpha.com/author/andrew-hecht]: I am bearish on crude oil for the following reasons. U.S. energy policy favors "drill, baby, drill" and "frack, baby, frack". Regardless of what they say, OPEC+ will continue to attempt to maintain market share with output. Seasonality during winter favors the downside.

I favor the bearish leveraged ProShares UltraShort Bloomberg Crude Oil ETF (SCO [https://seekingalpha.com/symbol/SCO]) with tight time and price stops. Technical support is around $55 per barrel on the NYMEX contract. I expect a lower low.

Long Player [https://seekingalpha.com/author/long-player]: Generally, I stay away from ETFs because I very much prefer to make my own baskets, which in essence is my own fund.

The thing I really don't like about ETFs is that many of them liquidate at market bottoms and then come back during the next bull market. So they are there to give you losses in essence, and then after you have lost enough money, they liquidate so you have nothing to use to participate in the coming recovery.

As a trade, some are OK. But the leveraged ones I especially stay away from, as they require a lot of monitoring. I am a buy-and-hold investor. A lot of these are really not suitable buy-and-hold ideas.

MORE ON VANGUARD ENERGY INDEX FUND ETF SHARES, PROSHARES ULTRASHORT BLOOMBERG CRUDE OIL ETF, ETC.

* AMLP: 4 Elements I Like To Remember About MLPs [https://seekingalpha.com/article/4836395-amlp-4-elements-i-like-to-remember-about-mlp]
* AMLP: Growth Expectation Amidst Oil Market Recovery [https://seekingalpha.com/article/4834549-alerian-mlp-etf-growth-expectation-amidst-oil-market-recovery]
* AMLP: The Right Time To Buy This 8.3% Yielder [https://seekingalpha.com/article/4834302-amlp-the-right-time-to-buy-this-8-3-percent-yielder]
* Crude inventory rises by 5.2M barrels for week ended Oct 31 – EIA [https://seekingalpha.com/news/4515821-crude-inventory-rises-by-52m-barrels-for-week-ended-oct-31-eia]
* Overbought, oversold, and everything in between as October comes to a close [https://seekingalpha.com/news/4511627-overbought-oversold-and-everything-in-between-as-october-comes-to-a-close]