One exchange-traded fund (ETF) that is offering investors the best of both worlds is the Vanguard Energy Index Fund (NYSE Arca: VDE). The energy-focused fund has risen 45% in value this year, vastly outperforming the struggling S&P 500, which is down 25%. The fund's portfolio is made up of over 100 stocks. The stocks in the fund average a price-to-earnings multiple of just under 10 and a price-to-book ratio of 2.3.
The ETF includes big names in the oil and gas industry, including producer Exxon Mobil (NYSE:XOM), which accounts for nearly 22% of the ETF's total weight. Chevron (NYSE:CVX) is the next largest holding at 16%, followed by ConocoPhillips (NYSE:COP), which is at just under 8%.
That's more than 45% tilted towards three companies, but those are also among the safest investment in the industry. In the case of Chevron and Exxon, both of those stocks pay yields of around 3.6%, and so it should be of little surprise that the ETF's overall yield is also fairly high at 3.3%.
For investors who want to bet on rising oil prices, this ETF can give them exposure to that while also earning a decent payout along the way. The fund also doesn't charge much, with a net expense ratio of only 0.1%.
Oil prices have been declining in recent weeks but with OPEC announcing production cuts of 2 million barrels per day, the price of oil may remain high for the foreseeable future, and that can make investing in this fund a great move right now.
