Go to the Bench for Oil Substitute
Earlier this week I swapped out of BP and into WisdomTree International Energy Fund (DKA). This was something I had been thinking about doing for a couple of weeks. BP has been struggling for several reasons. I think for the short term, 6-9 months, BP may not be able to outperform the sector.
If this turns out to be correct, taking the singe stock risk is not ideal. If this turns out to be incorrect and BP goes up a lot I would expect DKA to benefit as BP is weighted at 9% of the fund.
To be clear I expect the two to correlate very closely. If things get worse for BP clients will miss a portion of that lag.
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3 comments:
I think you did your clients a favor on this swap. BP has a number of problems to deal with, as we all know. Some of them will not go away soon.
A neglected closed-end fund that may also serve a purpose is the old Petroleum and Resources Fund (PEO), a close friend of the even older Adams Express.
Now I am showing my age.
I have gone a long time w/o thinking about PEO, wow. Yes I hvae heard of it.
After the great run in energy there may be something to ETFs for most of your (generically speaking, not giving T specific advice) energy exposure and then one or two theme names.
It's kind of funny that we still have active funds like ADX, PEO, and TY that predate the depression still trading.
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