Checking In: A Forgotten Global Oil Play

The universe of equity-based oil ETFs is now so expansive that it's not unheard of for a few funds to fall through the cracks. In particular, ETFs that focus on international oil companies seem to struggle to captivate investors here in the States as ETFs like the Energy Select Sector SPDR (NYSE: XLE) dominate the battle for assets.

In recent months, we've highlighted several overlooked international energy ETFs that may be worth further examination and today's “Checking In” candidate is just that: An overlooked international energy ETF. Let's look at the iShares MSCI ACWI ex US Energy Sector Index Fund (NYSE: AXEN) to see how valid the investment thesis is here.

Home to almost 100 stocks, AXEN made its debut in July 2010, so its timing was good in terms of debuting when oil prices were on the upswing. Or it can be argued that when an ETF's top holding is BP (NYSE: BP), July 2010 was a risky time to roll out such an ETF.

Either way, AXEN has accumulated just $6.3 million in assets under management since its debut. That's barely more than a third of what the SPDR S&P International Energy Sector ETF (NYSE: IPW) has and less than one-seventh of the AUM total sported by the WisdomTree International Energy Sector Fund (NYSE: DKA).

An expense ratio of 0.48% makes AXEN the cheapest play of this trio and the fund has other pros, and some cons, worth noting. When one looks at international energy ETFs, the prominent holdings are likely to be BP, Royal Dutch Shell (NYSE: RDS-A), Total (NYSE: TOT) and Petrobras (NYSE: PBR) as far as the U.S. listed names go.

Those names account for about 32% of AXEN's weight and the exposure to Shell and Total is something to applaud as that pair offer yields that are superior to their U.S. rivals. AXEN also offers some Russia exposure along with slight exposure to some oil services names, including Transocean (NYSE: RIG).

Combine those factors with AXEN's uranium holdings, small as they may be, and this ETF doesn't shy away from controversy. That may be why the fund has struggled to accumulate AUM, but that's just speculation.

To be sure, international energy ETFs as a group aren't AUM superstars, so it might be best to say that while AXEN has an interesting lineup of stocks, the jury is still out on this ETF.