If you heat your home with oil or natural gas, or drive a vehicle with an internal combustion engine, you see how volatile energy prices can be every time you pay your fuel bills. That type of volatility is pervasive in the energy patch, and it has a significant impact on investor sentiment. Yet having some exposure to the energy sector can offer valuable diversification to your portfolio. Here are some ways to deal with oil's inherent ups and downs.

If you're an active investor, it might sound counterintuitive, but you can hire someone else to handle subsets of your portfolio. In effect, you bring in an expert to track industries that you don't have the time or desire to monitor. Given the historical volatility in the energy space, it wouldn't be a bad plan to just throw your hands up and give the job to someone else by way of a closed-end fund, mutual fund, or exchange traded fund (ETF) focused on the energy patch. There are a huge number of options. 

Image source: Getty Images.

Continue reading

Source Fool.com