John HoodiShares S&P/TSX Capped Energy Index ETFXEG.TOWATCHJan 10, 2025

Choose an ETF like this for diversified exposure. Her team often parks money in a parking spot like this as they do their due diligence on a particular name. Keeps you exposed to the sector until you find a favourite name.

No need to plunk your $$ down right this minute. She wouldn't be surprised to see more volatility and another selloff in the next few weeks. Be patient, and wait for a good entry point.

He's in the camp that any advantage to the Canadian oil industry is transient, not long term. We need structural change in how the Canadian government looks at our ability as Canadians to distribute one of our best assets to the world. Until that happens, Canada will always trade at a discount to just about everywhere else in the world that sees O&G in a different light.

If your view is that the benefit is longer lasting, you'd move toward small caps. So equal-weight ZEO would potentially give you a better return than XEG. But that's not his outlook.

Since the war broke out, XEG is outperforming. The market sees recent moves as temporary, not permanent.

ENCC has a covered call component, which can be difficult with the volatility. Use this one if you're looking more for income.

If you don't want the covered call just go with the XEG, the Canadian basket. Quite a few advantages:  we're isolated from the Iran conflict, our infrastructure is good, and we have at least some pipelines.

Though the conflict may get resolved "tomorrow", the price of oil isn't coming down to $60/barrel anytime soon.

Return of 44%. January saw big run in O&G stocks.

An oil shock (i.e. geopolitical cause like Ukraine) would derail markets and curtail growth. A little energy exposure gives you a hedge. MER is 0.6%.

Historically in a commodity bull market, gold moves first, metals move second, and energy moves third. Take a look at XEG, which has just broken out of a big range.

Canadian market's outperforming the US market and has been for 18 months. Who would have guessed at the beginning of the year? Once that starts, it usually goes on to behave that way for 7-9 years at a time. Important big picture:  international markets, which include Canada, are in a great spot.
 
XEG is the Canadian oil and gas ETF. Just broke out to new highs. In fact, making a new high today. Thinks we're in very early stages of bull market in energy. Higher volatility, but will likely be great risk/reward over a 3-4 year hold.

If you're bullish on nat gas, then you're going to be bullish on the Canadian producers. XEG is another big one in Canada. We're going to need energy produced from all sources. In 5-10 years we're going to see higher energy prices, and that's when you'll see the benefit of your investment.

He's relatively positive on Canadian energy, with some caveats. Oil stocks have been near the bottom of a trading range, whereas the gas stocks have done OK. More probability of upside in gas over the next couple of years. Yet there might be opportunity in oil stocks.

This ETF is probably more biased towards oil. Try to buy on a lift off the bottom, and then sell somewhere near resistance. This one is bouncing off the halfway point of the range, which is support from 2024. You have a decent chance of it getting to the $18-19 range or maybe a bit higher. He'd rather trade individual stocks than the ETF.

The cap is pretty high. He doesn't know if there are more equal weight ETF's in the energy sector

The go-to energy ETF. He's bullish energy, particularly Canadian. Is market-cap weighted, so you get more exposure to big names like Suncor and less to smaller names.

There are funds that have materially beaten this one. Most of the planet owns CNQ, and it's the top holding of this fund. SU is second. Those names have done really well, but there's now more upside in other names. More potential in mid-cap names.

Bullish on energy. Breakout on many oil and gas equities. Still lots of opportunity in sector. Investors not overly interested in sector. 

It's such a broad sector, from energy to oil-related to materials to gold or uranium.

The most popular one related to the energy index is probably XEG. Exposure to most of the larger Canadian energy producers like CNQ, SU, etc.

What's catching his eye more right now is CGL, the gold bullion ETF. Recently broken out. He can see a scenario where gold moves higher to $2600 or even $3000 over the next year and a bit. Avoids the issues that come with mining in certain jurisdictions. Good way to play exposure to gold and to the commodity market in general.