IEO vs UMI

IEOBiShares U.S. Oil & Gas Exploration & Production ETF

UMIDUSCF Midstream Energy Income Fund

In short

IEO One of the original ways to own U.S. upstream energy: since 2006 this iShares fund has tracked a single index of about 50 American oil and gas exploration and production stocks. Pure upstream, pure U.S.

UMI Most pipeline funds are index machines. UMI is a stock picker: sub-adviser Miller/Howard runs a concentrated book of US and Canadian midstream names, with current income as the stated first job and a payout that lands monthly.

Stated mandate

IEO The Fund seeks to track an index of U.S. equities in the oil and gas exploration and production sector. It uses a sampling-based indexing approach and normally invests at least 80% of net assets in components of the Underlying Index.

UMI The Fund seeks a high level of current income and, secondarily, capital appreciation. It actively invests at least 80% of net assets in equity securities of U.S. and Canadian midstream energy companies.

Why people hold it

• IEO Tight mandate: at least 80% of net assets sit in components of the Dow Jones U.S. Select Oil Exploration & Production Index. Upstream U.S. energy, not a mixed energy basket.ishares.com
• About 50 holdings: concentrated enough to move with drilling economics, broad enough that one blown-up producer is not the whole story.
• Trading since 2006, so its index record spans multiple oil cycles, with the iShares platform running the plumbing.
• Producer dividends are passed along on a quarterly schedule.

• UMI Actively managed, not index-tracking. Miller/Howard screens midstream companies on income, distribution coverage, leverage and contract quality, and holds roughly 30 of them.uscfinvestments.com
• Current income is the declared primary objective and capital appreciation the secondary one, and the cash goes out monthly rather than quarterly.
• Canada is written into the mandate, not treated as a footnote: at least 80% of net assets go to equity in US and Canadian midstream companies of any size.uscfinvestments.com
• Direct MLP exposure is capped at 25% of total assets, the line that keeps the fund taxed as a regulated investment company instead of as a corporation.uscfinvestments.com

Worth knowing

• IEO The 0.37% fee sits right at the middle of the E&P shelf: XOP and OIH charge 0.35%, PBOG 0.13%.
• One country, one sector, about 50 stocks. Crude and gas price swings pass straight through to the portfolio.
• Moderately traded rather than the busiest ticker in the category, which can matter on larger orders.

• UMI Stock picking carries a price: the 0.85% expense ratio runs well above the median for its oil and gas cohort, where XOP and IEO sit near 0.35%.
• It trades thinly next to the big energy ETFs, so spreads can be wider and sizable orders need more care at the screen.
• About 30 names inside one slice of one sector, and the fund discloses that distributions can include return of capital, which reduces your cost basis.

Full IEO profile⁠

Full UMI profile⁠