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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.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $39.25 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 3.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 23.01% of total assets, followed by Chevron Corporation (CVX - Free Report) and Eog Resources Inc. (EOG - Free Report) .
The top 10 holdings account for about 73.19% of total assets under management.
Performance and Risk
So far this year, XLE has added roughly 44.09%, and it's up approximately 65.95% in the last one year (as of 05/05/2022). During this past 52-week period, the fund has traded between $45.79 and $81.75.
The ETF has a beta of 1.39 and standard deviation of 41.29% 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 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLE is an excellent 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 $3.86 billion in assets, Vanguard Energy ETF has $8.88 billion. IYE has an expense ratio of 0.41% 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.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $39.25 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 3.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 23.01% of total assets, followed by Chevron Corporation (CVX - Free Report) and Eog Resources Inc. (EOG - Free Report) .
The top 10 holdings account for about 73.19% of total assets under management.
Performance and Risk
So far this year, XLE has added roughly 44.09%, and it's up approximately 65.95% in the last one year (as of 05/05/2022). During this past 52-week period, the fund has traded between $45.79 and $81.75.
The ETF has a beta of 1.39 and standard deviation of 41.29% 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 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLE is an excellent 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 $3.86 billion in assets, Vanguard Energy ETF has $8.88 billion. IYE has an expense ratio of 0.41% 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.