ENCL vs. OILY: The Ultimate Canadian Energy Covered Call ETF Showdown
Video: https://youtu.be/GA63eqXgbCY
The energy sector is heating up, and with geopolitical tensions rising in the Strait of Hormuz, oil price volatility is back at the forefront of every investor's mind. If you are looking to capture high yields while maintaining exposure to the Canadian energy patch, you've likely come across two heavyweights: ENCL.TO and OILY.TO.
In this post, we’re going to look past the marketing fluff and dive into the hard data pulled from my proprietary analysis tool to see which of these "leverage + covered call" titans deserves a spot in your portfolio.
1. The Current Leaderboard: Real-Time Performance
Using DRIP (Dividend Reinvestment) as our baseline, we compared the mainstream high-yield energy ETFs. While many are performing well, ENCL and OILY have clearly separated themselves from the pack:
| ETF Ticker | Total Return (DRIP) |
|---|---|
| ENCL.TO | +38.61% |
| OILY.TO | +36.96% |
| NRGI.TO | +33.68% |
| HPF.TO | +33.31% |
| NXF.TO | +32.97% |
| EMAX.TO | +31.18% |
ENCL and OILY have delivered significant alpha compared to their peers. Let’s deconstruct why.
2. The "Killer Feature": Leverage + Indexing
Why are these two winning? It comes down to two specific structural advantages: 25% Leverage and a Strictly Index-Based Strategy.
Most other ETFs lack one of these components:
- Harvest’s HPF: Great diversification (20 holdings), but lacks the 1.25x leverage, causing it to trail in a rising market.
- Ninepoint’s NRGI: Solid, but no leverage and is actively managed, lacking the transparency of an index.
- CI’s NXF: Quarterly distributions make it less attractive for those seeking monthly cash flow.
- EMAX: Strong, but lacks the 25% leverage and the "self-cleansing" mechanism of a rule-based index.
3. Deep Dive: ENCL (Global X)
Launched in 2023, ENCL has quickly scaled to $310M AUM. It rides the energy bull market by amplifying returns through 1.25x leverage and rotating holdings via its index.
Performance Metrics:
- TTM Yield: 13.69% (Paid Monthly)
- CAGR (Since Inception): 24.51%
- Total Return (Since Inception): 71.11%
- Max Drawdown: -27.74%
The Secret Sauce: Equal Weighting
ENCL tracks the Mirae Asset Equal Weight Canadian Oil and Gas Index. Unlike market-cap-weighted indices, this "equalized" approach means mid-cap energy stocks can drive the rally without being held back by sluggish mega-caps. With only 12 holdings, it’s a precision strike on the most liquid targets in the Canadian patch.
Leverage vs. Covered Calls
To see ENCL’s efficiency, I compared it to NRGY.TO (the same index, but no leverage/no calls):
- NRGY (Unleveraged): +43.39%
- ENCL (1.25x Leverage + CC): +41.54%
The 25% leverage effectively offsets the upside limitation of the covered calls. Because energy is a high-volatility sector, ENCL’s call coverage is often kept lower (around 35%–40%), preserving room for price appreciation.
4. Deep Dive: OILY (Evolve)
Launched by Evolve in 2025, OILY is the leaner competitor with a lower management fee of 0.6% (vs ENCL's 0.85%).
Performance & Tracking:
- TTM Yield: 13.21%
- OILY YTD Return: 28.41%
- Underlying Index (Solactive Top 10) YTD: 27.55%
OILY tracks its index with incredible precision. This is thanks to Evolve’s efficient strategy and a strict 33% coverage cap on covered calls. Like ENCL, the 25% leverage perfectly offsets the "call-away" risk during price surges.
Holdings: 12 vs. 10
The portfolios are largely the same, holding giants like CNQ, Suncor, and Enbridge. The subtle difference is that ENCL includes 12 stocks (including mid-caps like Whitecap (WCP)), while OILY focuses purely on the Top 10 giants. That 2% performance gap is largely due to those specific mid-caps providing extra alpha in the current cycle.
5. Personal Choice: Consistency is King
If you value backtested performance and high liquidity, ENCL is the undisputed choice right now. Its $300M+ scale makes it easy to move in and out with minimal slippage.
However, I personally lean towards OILY.
While its total return is slightly lower, OILY's tracking efficiency is top-notch. But more importantly for income investors: Dividend Consistency.
In the high-volatility energy sector, most ETFs (including ENCL) tend to match their payouts to the NAV. If the NAV drops, the dividend shrinks. For those relying on dividends to pay bills, this uncertainty is tough. Evolve is famous for its "reluctance to cut." They prioritize a stable payout floor. Once they set a standard, they fight to keep it there.
Final Verdict:
- Choose ENCL if: You want the highest possible total return and max liquidity.
- Choose OILY if: You want a "steady paycheck" experience with lower fees and more consistent distributions.
🎉 Oldfish's Easter Egg: Why I Hold OILY
I’ll be honest with you all—I’m not just an analyst; I’m a practitioner. I rely on these distributions to live. For that reason, I hold a position in OILY because I value Evolve's "payout discipline" over maximum capital appreciation.
Of course, I also have a little bit of a hidden agenda. By promoting OILY and helping it grow its scale, I'm hoping to increase its liquidity enough that my broker reduces the Margin Requirement down to 30%. I can dream, right? Hope this helps!
I’m Oldfish—if you found this analysis helpful, consider subscribing to the newsletter and following my YouTube channel for more data-driven insights. See you in the next one!