Investing SIPP in oil?

MoneyBob

I think the global price of oil will inevitably rise in the longer term.

My pension will be growing for likely at least another 20 years before I take it out, so I can cope with some considerable volatility.

So I wonder about putting some of it in oil.

I am a novice at this.

I searched the funds available in Hargreaves Lansdown, where my SIPP is, for OIL and found rather a large number of them.

Any recommendations for one or some which I could invest in which would give me an exposure to the general worldwide oil market, rather than to some facet of it?

TY!

mr_fishbulb

Just oil, or commodities in general?

Priced in US $s which has already gained a fair bit against the £. When the conditions are right for oil/commodities to be in high demand again, do you think the exchange rate would have moved again?

Oil and commodities are often purchased as ETFs - look at the effect of contango

Have you thought about investing in the companies that extract/render the oil, instead of the oil itself?

MoneyBob

ETF's would be my preferred choice. Recommendations?

mr_fishbulb

Not really a recommendation, but if it were me, I'd be looking at some of the offerings from ETF Securities - http://www.etfsecurities.com/institutional/uk/en-gb/products.aspx

I had PHAG and PHAU a few years ago (should have held them - d'oh!). The reason I was saying about the exchange rate is I made more from that than the price of the metals going up.

MoneyBob

Thanks. I can't work out how much it will cost with H&L to invest in ETFS stuff. On funds it clearly states in their interface how much it will cost per annum (%) and whether or not there's a platform fee to pay.

Atm my portfolio is tiny, so I am keen to avoid the £2 a month platform fee but I can't tell if it will apply if I deal on an ETFS fund.

Lokolo

HL have a 0.5% fee for holding ETFs, shares or bonds directly. Maximum of £200 a year I believe.

sabretoothtigger

Just buy the FTSE and you are there, Rosneft is largest oil co in the world and BP owns 20% of it

Ark_Welder

For a counter opinion, google the FT headline Peak demand theory shakes up oil debate

brasso

Check out Junior Oils Trust. It's in the HL 'Wealth 150' which means little in one sense, but at least suggests that they have some faith in it.

More to the point, it's dropped about 20% in the last year, so you might think it represents good value at the moment. The fund invests in a number of oil drilling and ancillary service companies, and is actively managed.

I have bought into it (again) recently as I feel sure that it is due for a bounce back. Might not be immediate, but I'm certain it will come.

Jegersmart

Just remember that oil-related equities are not necessarily correlated with the physical price of oil.......! I know it sounds obvious but.....a lot of people do not seem to be aware of this......

J

sabretoothtigger

Its confusing, I think woodford talks about cost of replacement to reserves sold and how badly off the oil majors are in the long term.
A higher price helps but inflation causes them higher costs and if they struggle to discover new oil without screwing things up like BP did then it can be less profitable with a higher price.
Which sounds like profit margin but I think its more in depth then that

Alot of oil is about politics too, I have that Junior oil fund and its the riskest thing I got