Five Stocks Underrepresented Among ETFs

Investors looking for ETFs to act as proxies for certain stocks have no shortage of options. Want a fund a with large weight to Apple (Nasdaq: AAPL) so you don’t have to pay Apple’s triple-digit price tag? There’s an ETF for that. Want oil equities exposure with a bias to Exxon Mobil (NYSE: XOM) without an exclusive commitment to that stock? There’s an ETF for that, too.

Those are just two examples. There are plenty more. However, there are also more than a few examples of large, well-known stocks that are underrepresented in the ETF arena. Here are five, that in our opinion, should be weighted a bit more heavily by ETFs. In no particular order…

Transocean (NYSE: RIG):
Transocean is the world’s largest provider of offshore drilling services and as the world’s largest provider of anything related to the oil business, one might think RIG was easy to find in the ETF world. It’s not. The Oil Services HOLDRS (AMEX: OIH) offers a weight of just under 10% to RIG, making it the only ETF to allocate a noteworthy portion of its weight to this stock. Transocean is based in Switzerland and it’s nowhere to be found in the iShares MSCI Switzerland Index Fund (NYSE: EWL).

General Mills (NYSE: GIS):
It’s not hard to find General Mills rival Kraft (NYSE: KFT) in ETFs, probably because the latter is a Dow stock and bigger than Big G. That’s too bad because General Mills has consistently outperformed Kraft in recent years. Plus, Big G is a reliable dividend stock and it’s “just” the second-largest U.S. food company. Only the Global X Food ETF (NYSE: EATX) features General Mills a prominent holding.

BHP Billiton (NYSE: BHP):
The only excuse here, and it’s a weak one, is that BHP is not a U.S.-based company. This is the largest mining company in the world and has a market value of close to $208 billion. The fact that just two ETFs, the iShares MSCI Australia Index Fund (NYSE: EWA) and the PowerShares BLDRS Asia 50 Index (Nasdaq: ADRA), give double-digit allocations to BHP is stunning.

Caterpillar (NYSE: CAT):
As Roger Nusbaum noted earlier this week, Caterpillar is a good example of a situation where it’s best to own the stock directly instead of using an ETF as a proxy. A lot of ETFs hold CAT, but not a lot feature the world’s largest maker of construction and mining equipment prominently. With CAT flirting with $100 again, that’s disappointing.

Read more at benzinga