iShares S&P/TSX Capped Energy Index ETF…

iShares S&P/TSX Capped Energy Index ETF (XEG.TO)

24.59

+0.17 (0.70%)

as of Jun 19, 2026, 7:59:58 pm Market Open.

118 watching

COMMENT

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.

WAIT

Canadian Energy Sector and especially XEG-T. XEG-T is a great ETF to play the energy market overall. It is a good core position for the Canadian sector. Seasonally it is strong until May 9. It is based on supply/demand imbalances. It is not working right now but does not mean it will not work soon. The net seasonal period is late July into early October. When he finds weakness through the summer it often work well in the fall. But he would not look at it right now.

COMMENT

The composition of this ETF has become highly concentrated. Five names account for 78% of its value. CNQ and SU account for most it. Both of those names have rallied well compared to their peers as buyers in the US have been stepping in. However, their hedge books are naked to oil prices right now. He would prefer to own small cap names with good hedge books, if you select the right ones he thinks.

COMMENT

How long will oil companies hang onto their dividends before cutting them? $40 is around the break-even for Canadian oil prices and oil is below that today. Globally, there's an oil glut. It needs a lot more demand or a supply shock, but the latter will bankrupt some companies. Cuts to dividends and production are likely. Friday's OPEC news was an alarm to get out of oil. WTI's neckline is $42 and now it's $31. We could return to 2016's $26, but he wouldn't be surprised with a snapback rally. Oil is so difficult for the average trader.

TOP PICK

It's a good buy now, because the oil companies have been efficient and there have been two court decisions favourable to the Oil Sands.

DON'T BUY

Energy is a big part of the Canadian story. The world is serious about climate change. We need balance in the transition away from fossil fuels and limiting pipeline capacity is one of the most idiotic way of doing this.

BUY

Prefers this over ZEO, as he likes the market weight of the likes of Suncor. Both are baskets of Canadian energy companies.

PAST TOP PICK

(A Top Pick Aug 12/19, Up 17%) It has had higher lows since he recommended it. You needed to have an exit plan. It is still a good place to be.

TOP PICK

If you decide you want to buy into the energy sector, which has been beaten up so badly, this is a good way to sneak in. It has bigger companies and it’s a relatively safe way of putting your toe in the water. You have to believe there’s a turnaround coming if you choose this pick.

BUY

Has oil hit a bottom, so time to buy XEG? Could be a major bottom here. If we get the TransMountain done and release Alberta/Saskatchewan oil to world markets, this would be a huge value relief for the Canadian oil sector. However you play this, like XEG and ZDO, you will get a big bang for your buck on the small/mid-caps vs. the large-caps which have been beaten silly. Play XEG with an option strategy; buy a call spread in the future when you predict a rally. Pay for this by writing puts. If the market keeps declining, you'll be put at a lower price; the call option becomes free on the upside. Calling a bottom now is very difficult.

DON'T BUY

Energy faces a lot of challenges. If you're contrarian you can buy some of this. He's not a fan of energy. Current energy prices are about right. Also, Aramco is going public, as announced today, which will attract some investment at the expense of Canadian energy stocks. Alberta needs pipelines.

TOP PICK

He's re-entered the space with another announcement of pipeline being reconsidered. A lot of these companies are back making money. The energy sector should see some change shortly, and if there is a change, oil companies will do well.

DON'T BUY

Limited energy in his portfolio, only Enbridge. Sector is trending downwards. Late cycle, when energy is not the best performer.

DON'T BUY

Canadian energy ETF. In terms of carbon risk, these are exclusively oil and gas. Has massive concerns about it. The world is shifting towards a low carbon economy. He expects them to continue paying dividends, but no growth.

TOP PICK

We are trying to bottom here. A year from now energy will be a good risk/reward.

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