Opinions Mike Philbrick
BMO S&P/TSX Oil & Gas ETFZEO.TOCOMMENTDec 30, 2025
Mike PhilbrickStock price when the opinion was issued
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Relative strength in energy started to move up before the war started as capital was moving into this sector.
Colin CieszynskiHe'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.
Not devastating, but there are other things to do with capital. With the current macro economic situation, keep this allocation smaller. Follow through in the markets and some outperformance in energy would be encouraging. It's probably going to be a volume game, not a price game.
Excellent exposure to energy sector. Equal weight across the energy sector. Yield ~4.2% with a low management expense ratio. Energy cycle favorable to investors. 4% energy sector weighting on S&P 500 (traditionally higher) indicating room for further gains in sector as a whole.
Mike PhilbrickEnergy shares struggling first half of 2023.
Not a good pattern for investors.
Has sold shares.
Brooke Thackray
Larry Berman CFA, CMT, CTAChallenge 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.
ENCC is the Global X oil and gas, covered call, income ETF. Compare to ZEO, which boasts 13% this year vs. ENCC's 12%; while over 3 years, it's 46% vs. 40%. The difference lies in the covered writing; you sell some of that future growth to create income now. That's neither good or bad. Also, gas and oil stocks are more volatile, though that makes call premiums higher but adds income.