This Top Energy ETF Holds 112 Stocks. But These 2 Make Up Over 33% of Its Holdings.

One of the great things about investing in exchange-traded funds (ETFs) is that they provide instant diversification across a market or sector. Many hold 100 or more stocks. That diversification helps reduce risk. However, not all ETFs are as diversified as they seem. While the Vanguard Energy ETF (NYSEMKT: VDE) holds 112 energy stocks, two of those holdings -- ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) -- comprise more than a third of the total. That's an important factor investors need to evaluate when considering this ETF.Vanguard Energy ETF enables investors to passively invest in the energy sector. The ETF seeks to track the performance of a benchmark index, the MSCI US IMI Energy 25/50, that measures the returns of energy stocks. That benchmark holds 111 stocks, one less than the Vanguard Energy ETF. However, they both have very similar allocations to the same energy stocks. Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool