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Should You Invest in the Energy Select Sector SPDR ETF (XLE)?
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If you're interested in broad exposure to the Energy - Broad segment of the equity market, look no further than the Energy Select Sector SPDR ETF (XLE - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $40.85 billion, making it the largest ETF attempting to match the performance of the Energy - Broad segment of the equity market. XLE seeks to match the performance of the Energy Select Sector Index before fees and expenses.
The Energy Select Sector Index includes companies from the following industries: oil, gas & consumable fuels and energy equipment & services.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.68%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.
Looking at individual holdings, Exxon Mobil Corporation (XOM - Free Report) accounts for about 22.88% of total assets, followed by Chevron Corporation (CVX - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) .
The top 10 holdings account for about 73.62% of total assets under management.
Performance and Risk
The ETF has gained about 0.10% and it's up approximately 50.03% so far this year and in the past one year (as of 01/09/2023), respectively. XLE has traded between $61.15 and $94.08 during this last 52-week period.
The ETF has a beta of 1.37 and standard deviation of 43.82% for the trailing three-year period, making it a high risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.
Alternatives
Energy Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLE is an outstanding option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Energy ETF (IYE - Free Report) tracks Dow Jones U.S. Oil & Gas Index and the Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index. IShares U.S. Energy ETF has $2.25 billion in assets, Vanguard Energy ETF has $8.59 billion. IYE has an expense ratio of 0.39% and VDE charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the Energy Select Sector SPDR ETF (XLE)?
If you're interested in broad exposure to the Energy - Broad segment of the equity market, look no further than the Energy Select Sector SPDR ETF (XLE - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $40.85 billion, making it the largest ETF attempting to match the performance of the Energy - Broad segment of the equity market. XLE seeks to match the performance of the Energy Select Sector Index before fees and expenses.
The Energy Select Sector Index includes companies from the following industries: oil, gas & consumable fuels and energy equipment & services.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.68%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.
Looking at individual holdings, Exxon Mobil Corporation (XOM - Free Report) accounts for about 22.88% of total assets, followed by Chevron Corporation (CVX - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) .
The top 10 holdings account for about 73.62% of total assets under management.
Performance and Risk
The ETF has gained about 0.10% and it's up approximately 50.03% so far this year and in the past one year (as of 01/09/2023), respectively. XLE has traded between $61.15 and $94.08 during this last 52-week period.
The ETF has a beta of 1.37 and standard deviation of 43.82% for the trailing three-year period, making it a high risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.
Alternatives
Energy Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLE is an outstanding option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Energy ETF (IYE - Free Report) tracks Dow Jones U.S. Oil & Gas Index and the Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index. IShares U.S. Energy ETF has $2.25 billion in assets, Vanguard Energy ETF has $8.59 billion. IYE has an expense ratio of 0.39% and VDE charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.