PowerShares Dynamic Energy Explor. (ETF) (AMEX:PXE)

NetscribeETF (37.64) Submitted: 3/19/2007 2:32:27 AM : Start Price: $18.47 PXE Score: +20.21

The PowerShares Energy Exploration & Production Portfolio invests in the Energy Exploration & Production Intellidex Index that possess the greatest capital appreciation potential. The Index consists stocks of 30 United States companies involved in the exploration and production of natural resources primarily engaged in exploration, extraction and production of crude oil and natural gas from land-based or offshore wells.
Top ten holding of the fund accounts for about 45% of the total corpus, which are considered to be industry leaders with financially strong balance sheet. Asset allocation of the fund in terms of market capitalization is almost equally distributed among large, medium and small caps, whereas the investment style is dominated by value investing as reflected by its average price to earnings multiple of 8.9 and price to book value of 2.16.
Though, the energy prices have declined significantly from their recent highs, geopolitical tensions and other actions in the Middle East support rising oil prices with volatility. Quest for low cost drilling opportunities continue due to high field depletion rates and increased demand for natural gas. As already mentioned the individual components represent industry behemoth with Conoco Philips, Chevron Corp, Exxon Mobil accounting for 5% of the total corpus each.
Except the years 2000-02 bear market, it has posted excellent returns. The expense ratio doesn’t seem impressive when compared with its peers. Not much diversification is provided by the fund when compared to Vanguards energy ETF with 150 individual stocks. However, the benefits outweigh the risk, making it a good buy.