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Greenberg: The Best ETF Oil Plays

AP

With the price crude gushing past the S&P 500 over the past two years, up 160 percent versus a mere doubling for the market, the best move for ETF investors may not be what you think.

Despite oil’s run, energy sector stock ETFs, which invest in the stocks of energy companies, have been the clear winner —thanks to the extra kick they get from the stock market.

That’s why they have $22 billion in assets versus just $4.3 billion for the oil commodity ETFs, which bet on the direction of oil and energy prices through commodity contracts. And inflows, so far this year, of $3.4 billion, compared with just $358 million for oil commodity funds.

But as Nick Colas of ConvergEx points out today in a report, it’s getting trickier, especially as the stock and oil markets decouple, as they have recently.

If the decoupling continues, he told me, the commodity funds should get the upper hand. Consider that over the past year, two years and year-to-date, crude has outstripped the S&P by a wide margin (45% vs. 16%, 163% vs. 94%, and 16% vs. 4%, respectively.)

The biggest energy-stock ETF is the Select Sector SPDR-Energy , better known as the XLE, with $10.9 billion in assets.

And proving that size doesn’t necessarily matter, the best performer among energy-stock ETFs was the substantially smaller iShares Dow Jones U.S. Oil & Gas Equipment Services ETF , known as the IEZ, up 188% over the past two years, versus the XLE’s 100% gain.

By contrast, the biggest oil commodity ETF is the United States Oil Fund (the USO), with just 1.9 billion and a year-to-date gain of just 8.8%.

My take: Good luck trying to figure out this one. As Colas suggess, it’s easier to learn origami.

Questions? Comments? Write to HerbOnTheStreet@cnbc.com

Follow Herb on Twitter: @herbgreenberg

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