Overconcentrated in Oil and Gas Investments?

shutterstock_132704474A strengthening dollar and increased global supply of oil has sent crude oil prices tumbling in the second half of 2014. Recently, crude futures for delivery in February 2015 fell to $52.69 a barrel, the lowest finish since April 2009. Some experts are saying that if production volume continues to be as high as it currently is and demand growth weak that the return to $100 a barrel is years away.

As a result, in recent months investors have contacted our firm about being concentrated in various oil and gas exposed investments including private placements, stocks, and ETFs. On the private placement side alone the Securities Exchange Commission (SEC), has stated that since 2008, approximately 4,000 oil and gas private placements have sought to raise nearly $122 billion in investor capital. However, these oil and gas private placements suffer from enormous risks that often outweigh any potential benefits including securities fraud, conflicts of interests, high transaction / sales costs, and investment risk.

In addition, investor accounts may be overconcentrated in oil and gas stocks or ETFs. Some of these ETFs may be leveraged or non-traditional ETFs. These leveraged ETFs seek to increase the return on the oil and gas index by using leverage to amplify returns exposing the investor to greater volatility during an already volatile period in the oil market. Below are some of oil and gas related ETFs.

Exchange Traded Funds

AXEN – iShares MSCI ACWI ex US Energy Sector Index ETF

CHIE – Global X China Energy ETF

DBE – PowerShares DB Energy ETF

EMLP – First Trust North American Energy Infrastructure ETF

ENFR – Alerian Energy Infrastructure ETF

ENY – Claymore/SWM Canadian Energy Income ETF

ERX – Direxion Daily Energy Bull 3X Shares ETF

ERY – Direxion Daily Energy Bear 3X Shares ETF

FILL – iShares MSCI Global Energy Producers Fund

FXN – First Trust Energy AlphaDEX ETF

ICLN – iShares S&P Global Clean Energy Index ETF

IPW – SPDR S&P International Energy Sector ETF

IXC – iShares S&P Global Energy Sector ETF

IYE – iShares Dow Jones US Energy Sector ETF

JJE – iPath DJ-UBS Energy Total Return Sub-Index ETN

OGEM – EGShares Energy GEMS ETF

ONG – iPath Pure Beta Energy ETN

PSCE – PowerShares S&P SmallCap Energy Portfolio

PUW – PowerShares WilderHill Progressive Energy ETF

PXE – PowerShares Dynamic Energy Exploration & Prod ETF

PXI – PowerShares Dynamic Energy ETF

RGRE – RBS Rogers Enhanced Energy ETN

RJN – ELEMENTS Rogers International Commodity Energy ETN

RYE – Rydex S&P Equal Weight Energy ETF

UBN – UBS E-TRACS CMCI Energy Total Return ETN

VDE – Vanguard Energy ETF

XLE – Energy Select Sector SPDR

Natural Gas ETFs

DCNG – iPath Seasonal Natural Gas ETN

DDG – The Short Oil and Gas ProShares ETF

FCG – First Trust ISE-Revere Natural Gas ETF

BOIL – ProShares Ultra DJ-UBS Natural Gas ETF

KOLD – UltraShort DJ-UBS Natural Gas ETF

FRAK – Market Vectors Unconventional Oil & Gas ETF

GASL – Direxion Daily Natural Gas Related Bull 3X Shares ETF

GASX – Direxion Daily Natural Gas Related Bear 3X Shares ETF

GASZ – ETRACS Natural Gas Futures Contango ETN

GAZ – iPath DJ AIG Natural Gas TR Sub-Index ETN

IGAS – Global Natural Gas Small Cap Equity ETF

MLPG – UBS E-TRACS Alerian Natural Gas MLP Index ETN

NAGS – Teucrium Natural Gas Fund

UNG – United States Natural Gas ETF

Crude Oli ETF’s

BARL – Morgan Stanley S&P 500 Crude Oil Linked ETN

BNO – United States Brent Oil Fund

DBO – PowerShares DB Oil ETF

DNO – United States Short Oil Fund ETF

DTO – PowerShares DB Crude Oil Double Short ETN

DUG – UltraShort Oil & Gas ProShares ETF

IOIL – Global Crude Oil Small Cap Equity ETF

FRAK – Market Vectors Unconventional Oil & Gas ETF

OIH – Market Vectors Oil Services ETF

OIL – Goldman Sachs Crude Oil Total Return ETN

OILZ – ETRACS Oil Futures Contango ETN

OLEM – iPath Pure Beta Crude Oil ETN

OLO – PowerShares DB Crude Oil Long ETN

SCO – ProShares UltraShort DJ-AIG Crude Oil ETF

SZO – PowerShares DB Crude Oil Short ETN

USO – United States Oil Fund ETF

USL – United States 12 Month Oil Fund ETF

UHN – United States Heating Oil Fund ETF

UCO – ProShares Ultra DJ-AIG Crude Oil ETF

DDG – The Short Oil and Gas ProShares ETF

CRUD – Teucrium WTI Crude Oil Fund

WCAT – Jefferies TR/J CRB Wildcatters Expl& Prod Equity ETF

FOL – FactorShares 2X Oil Bull/S&P500 Bear ETF

SNDS – Sustainable North American Oil Sands ETF

Investors who have suffered losses in these products are encouraged to contact our firm. Brokers who sell oil and gas investments have an obligation to make sure that the investment is suitable for the investor and to disclose all the risks associated with the product. Our consultations are free of charge and the firm is only compensated if you recover.