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Mike Philbrick Horizons Cdn Midstream Oil & Gas Index HOG-T COMMENT Sep 17, 2020

Challenge with buying US ETFs that participate in MLPs is that they're not favourable to a Canadian investor. Withholding tax of 15-30%. Be very, very careful on the MLPs. If you want gas exposure, think about XEG or ZEO. Most bang for the buck would be the HED, with small cap exposure. Small caps have more operating leverage if you're confident gas prices will rise. HOG is a bit more conservative.

Mike Philbrick

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DON'T BUY

Doesn’t think there is a lot of upside potential in the oil/gas area. We are awash in supply, and he doesn’t think demand is increasing to the level that is going to be required to see any significant upside moves on this.

BUY

He likes the services and mid stream sector. They have a lot of leverage to the upside, but good dividends also. Drillers are cheap right now. Pipelines are closer to their highs than their lows. This is a diversified way to play.

RISKY

Though he doesn't like oil, this is worth looking at, because it holds oil services and transportation stocks and not just producers. If he was speculating in oil, he'd buy this.

BUY

A Canadian energy ETF besides XEG? ZEO offers better diversification than XEG, or especially HOG-T which focusses on energy midstreams (storage and transportation of oil/gas) with little overlap to the other two ETFs. Own ZEO and HOG. If you don't care about risk, then go for ZEO only.

BUY

ZEO-T He likes ZEO's equal weighted in energy. But also look at HOG-T which is midstream oil with a very different set of companies. Buy both, in fact. HOG also pays a 4.5% yield, slightly lower than ZEO's.

HOLD

It is going to perform a little bit differently. The draw down was not as severe as others. You had less risk along the way. As you get gains in it, re-balance to the rest of your portfolio.

COMMENT

XUT is market cap, ZUT is equal weighted. ZUT gives you more exposure to smaller players. HOG gives you more pipeline and energy services business, which acts similarly to utilities. It also hedges you on the downside. Could be a compliment to the other utility ETFs.

COMMENT

A conservative way to play pipelines and oil services in Canadian. It's lower-volatility than oil companies.

TRADE

It is a conservative way to play the Oil and Gas sector and therefore will be down less if there is a significant correction in that sector.

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Mike Philbrick Horizons Cdn Midstream Oil & Gas Index HOG-T COMMENT Sep 17, 2020

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