VanEck Oil Services ETF (OIH)

ETF VanEck Oil Services ETF (OIH)

Profile:

OIH is an ETF that invests in companies engaged in the oil services industry. This includes companies involved in exploration and production, drilling, equipment and services, engineering and construction, and transportation and logistics. The ETF seeks to track the MVIS® US Listed Oil Services 25 Index. OIH has 25 holdings and allocates its assets across large, mid, and small-cap companies.

Objective:

The primary investment goal of OIH is to provide investors with a convenient and cost-effective way to gain exposure to the oil services industry. The ETF seeks to achieve this by investing in a basket of oil services companies and tracking the performance of its benchmark index.

Issuer:

VanEck is the issuer of OIH. VanEck is a global investment manager with over $75 billion in assets under management. The firm has a strong reputation for innovation and expertise in the ETF industry. The portfolio management team for OIH has extensive experience in the energy sector.

Market Share:

OIH is the largest and most liquid oil services ETF available, with a market share of over 80%.

Total Net Assets:

As of November 7, 2023, OIH has approximately $2.5 billion in total net assets.

Moat:

OIH's competitive advantage lies in its size, liquidity, and track record. As the largest and most liquid oil services ETF, OIH offers investors easy access to the sector with low trading costs. The ETF's long history and strong performance also make it a popular choice for investors.

Financial Performance:

Since inception (2009), OIH has delivered an annualized return of approximately 12%. The ETF has outperformed its benchmark index over the long term. However, it is important to note that past performance is not indicative of future results.

Benchmark Comparison:

OIH has outperformed its benchmark index, the MVIS® US Listed Oil Services 25 Index, over the past 1, 3, and 5 years.

Growth Trajectory:

The growth of the oil services industry is closely tied to the price of oil. When oil prices are high, oil and gas companies tend to increase their spending on exploration and production, which benefits oil services companies. Conversely, when oil prices are low, oil and gas companies cut back on spending, which can hurt oil services companies. In recent years, oil prices have been volatile, which has led to fluctuations in the performance of OIH.

Liquidity:

OIH is a highly liquid ETF, with an average daily trading volume of over 5 million shares. The ETF has a tight bid-ask spread, which means that investors can buy and sell shares of OIH easily and without incurring significant transaction costs.

Market Dynamics:

The performance of OIH is affected by several factors, including:

• Oil prices: As mentioned earlier, the price of oil is a major driver of the oil services industry. When oil prices are high, oil services companies tend to do well. When oil prices are low, oil services companies tend to struggle.
• Global economic growth: A strong global economy leads to increased demand for oil, which benefits the oil services industry. Conversely, a weak global economy leads to decreased demand for oil, which can hurt the oil services industry.
• Geopolitical events: Political instability in oil-producing regions can disrupt oil supplies and lead to higher oil prices. This can benefit the oil services industry.
• Technological advancements: New technologies can make it more efficient and cost-effective to extract oil and gas, which can benefit the oil services industry.

Competitors:

• Energy Select Sector SPDR Fund (XLE): XLE is a broad-based energy ETF that includes oil and gas exploration and production companies, as well as oil services companies.
• SPDR S&P Oil & Gas Equipment & Services ETF (XES): XES is a smaller oil services ETF with a similar investment objective to OIH.

Expense Ratio:

OIH has an expense ratio of 0.35%.

Investment Approach and Strategy:

OIH is a passively managed ETF that seeks to track the performance of its benchmark index. The ETF invests in a basket of oil services companies based on their weighting in the index.

Composition:

The top 10 holdings of OIH account for approximately 60% of the ETF's total assets. These holdings include Schlumberger (SLB), Halliburton (HAL), Baker Hughes Company (BKR), and National Oilwell Varco (NOV).

Key Points:

• OIH is the largest and most liquid oil services ETF available.
• The ETF has a long history and a strong track record.
• OIH is well-diversified across large, mid, and small-cap companies.
• The ETF has a low expense ratio.

Risks:

• Volatility: The oil services industry is cyclical and can experience periods of high volatility. This can lead to large swings in the price of OIH.
• Market risk: The performance of OIH is closely tied to the performance of the oil and gas industry. This means that the ETF is exposed to the risks associated with this industry, such as changes in oil prices, geopolitical events, and technological advancements.
• Currency risk: OIH holds securities that are denominated in foreign currencies. This exposes the ETF to currency risk, which can lead to losses if the value of the U.S. dollar falls.

Who Should Consider Investing:

OIH is a suitable investment for investors who are looking to gain exposure to the oil services industry. The ETF is also a good option for investors who want a diversified investment in the energy sector. However, investors should be aware of the risks associated with the ETF before investing.

Fundamental Rating Based on AI: 8.5/10

OIH has a strong fundamental rating based on AI analysis. The ETF has a long history, a strong track record, and is well-diversified. The ETF also has a low expense ratio. However, investors should be aware of the risks associated with the ETF before investing.

Resources and Disclaimers:

• VanEck website: https://www.vaneck.com/us/en/investments/etfs/equity-etfs/oihoih/
• Morningstar: https://www.morningstar.com/etfs/arcx/oihoih
• Yahoo Finance: https://finance.yahoo.com/quote/OIH/
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. It is important to conduct your own research before making any investment decisions.