The energy sector has been in focus lately, following heightened tensions in the Middle East.
Today, ASX energy shares fell sharply as US President Donald Trump announced a ceasefire between Israel and Iran.
The market appeared to believe that Iran would be unlikely to follow through with threats to disrupt oil exports. This sent the oil price down to nearly US$70 a barrel.
Woodside Energy Group Ltd (ASX: WDS) slid 8% today, while Santos Ltd (ASX: STO) is down around 1% at the time of writing.
For investors who continue to believe oil prices could rebound, this could be an opportunity to buy ASX energy shares in the dip.
In particular, following today's decline, Woodside now offers a very attractive dividend yield of 7.8%, which may appeal to passive income-oriented investors.
However, by limiting their investment universe to the ASX, Australian investors omit many excellent global opportunities. Those looking to diversify their energy exposure internationally should consider the following ASX ETF.
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Betashares Global Energy Companies Cur Hdg ETF (ASX: FUEL)
Betashares Global Energy Companies Cur Hdg ETF provides access to the world's largest energy companies.
For a management expense of 0.47%, investors gain access to 34 companies in a single trade. All companies are located outside Australia, giving ASX investors geographical diversification to complement their ASX energy holdings.
The ETF contains well-known global energy companies. As of 20 May, its top three holdings were Shell PLC (8.2%), Exxon Mobil Corp (7.7%), and Chevron Corp (7.2%).
Notably, Chevron is one of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B)'s biggest holdings. Warren Buffett initiated a position in the stock in 2020 and owns nearly 7% of outstanding shares.
Around 56% of FUEL ETF's investments are listed in the United States, with the remainder from countries including Canada (14%), the Netherlands (8%), and France (6%).
As of 20 May, it offered a 12-month distribution yield of 4.2%, with payments made semi-annually. While not quite as attractive as Woodside's dividend yield, this is still attractive passive income.
This ETF is hedged back to the Australian dollar, eliminating currency risk.
How has the FUEL ETF performed?
Over the past five years, the FUEL ETF has outperformed the S&P/ASX 200 Index (ASX: XJO) by a wide margin. The FUEL ETF is up 71% compared to 45% for the index.
Notably, the FUEL ETF surged nearly 20% in the first half of 2022 after Russia invaded Ukraine.
Should geopolitical tensions continue for the remainder of 2025, there's a very good chance that both the energy sector and the FUEL ETF will continue to outperform the market.
