BMO S&P/TSX Oil & Gas ETF (ZEO.TO)

(Top Pick Aug 6/15, Up 0.64%) It had a pivot in early Sept at $10. This should be the start of an Eliot wave pattern.

Crude is not making new lows and so this one is oversold. It is equal weight.

Energy that has a little more pipeline. Equal weight. This is a good one. He has just bought some in the last 6 weeks.

Like iShares CLO-T and iUnits’ XEG-T, these are good assets that have been beaten up and he sees no reason why not to pick some up here, if your profile is fairly aggressive.

Dividend paying oil companies. If he decides to go into Canada and into oil this would be the one. XEG-T is too heavily weighted in SU-T and CNQ-T. This one is broader.

If you believe that oil is on sale, is there an ETF, US or Canadian, that has been beaten down worse than the others, and is this an opportunity? There are a couple that you could look at. iShares S&P/TSX Capped Energy (XEG-T) and BMO S&P/TSX Oil and Gas (ZEO-T). These are very similar, so either one. On the other hand, you could go into the US and pick up SPDR Energy (XLE-N), which has not been slaughtered quite as badly as the Canadian stuff.

You get a little more play on Trans Canada Pipe (TRP-T) and Enbridge (ENB-T), which he likes. This should work out very well because of Trans Canada Pipe leading the way on the Canada east contract. He thinks that is going to work out very well. This has lots of growth in it.

Yields 3.4% and on a risk adjusted basis, and you get a better quality dividend than the banks. It is one of the largest holdings he has. It is getting very attractive on a relative basis. It is a global dividend seeking fund. There will be increased volatility for the next year or so.

Actually iUnits S&P/TSX Capped Energy (XEG-T) has done much better, simply because Canadian Natural Resources (CNQ-T) and Suncor (SU-T), which are 30%-40% of the index, did so well over the last 6 months. As the energy business continues to do well, the gains will become more evenly distributed. Owning something like this in addition to, or instead of XEG would be the way to go if you like energy.

Charting it against iShares MSCI World Index Fund (XWD-T) for a comparison. Chart shows that the BMO product is a relative outperformance from February on.

Equally weighted. 3.2% yield. Better than one stock.

An equal weighted ETF. He would buy equal weighted over market weighted any day. Looking at oil in North America, there are so many moving parts. There is a worldwide backlash against our oil sands. We have pipelines that need to go east, west and south and none of them are going anywhere. There are rail issues. There is a game changer that the US will be the world’s largest producer by 2015. He would not be taking a huge position in this. 3.2% yield. (See Top Picks.)

Will outperform XEG shorter term. Wait for a correction to get in.