Exchange Traded Funds (ETFs)

Invest in Small-Cap U.S. Energy with This Fund

The Invesco S&P SmallCap Energy ETF (NASDAQ:PSCE) is a $106 million fund that seeks to track the investment results (before fees and expenses) of the S&P SmallCap 600 Capped Energy Index.

The fund generally will invest at least 90% of its total assets in the securities of small-capitalization U.S. energy companies that comprise the underlying index. These companies are principally engaged in the business of producing, distributing or servicing energy-related products, including oil and gas exploration and production, refining, oil services and pipelines. With its focus on energy, the fund is non-diversified.

PSCE represents the energy segment of the S&P SmallCap 600, a market-cap-weighted index that consists of U.S. small-cap companies screened for size, liquidity and financial viability. The fund holds a concentrated portfolio of small-cap energy firms, which may include those involved in oil & gas exploration and production, refining, oil services, as well as pipelines.

Selected securities are weighted by market cap and are constrained at each quarterly rebalance, such that individual securities will not exceed 22.5% weight. The aggregate weight of securities with more than 4.5% allocation is capped at 45% weight of the portfolio. Overall, PSCE is an interesting small-cap play in the U.S. energy sector.

Source: StockCharts.com

PSCE’s share price has experienced explosive gains of more than 136% during the trailing 12-month period and the fund looks poised to continue going higher. It has a 0.37% yield and 0.29% expense ratio, meaning it is relatively inexpensive to hold in relation to other exchange-traded funds.

However, as with any opportunity, I urge all potential investors to exercise their own due diligence in deciding whether this fund fits their own individual portfolio goals.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.