Looking for broad exposure to the Energy - Exploration segment of the equity market? You should consider the SPDR S&P Oil & Gas Exploration & Production ETF (
XOP Quick Quote XOP - Free Report) , a passively managed exchange traded fund launched on 06/19/2006.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Exploration is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $4.34 billion, making it one of the largest ETFs attempting to match the performance of the Energy - Exploration segment of the equity market. XOP seeks to match the performance of the S&P Oil & Gas Exploration & Production Select Industry Index before fees and expenses.
The S&P Oil & Gas Exploration & Production Select Industry Index represents the oil and gas exploration and production sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the US common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Oil & Gas Exploration Index is a modified equal weight index.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.52%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Continental Resources Inc. accounts for about 2.39% of total assets, followed by Occidental Petroleum Corporation (
OXY Quick Quote OXY - Free Report) and Exxon Mobil Corporation ( XOM Quick Quote XOM - Free Report) .
The top 10 holdings account for about 19.43% of total assets under management.
Performance and Risk
The ETF has added roughly 37.89% so far this year and is up about 56.94% in the last one year (as of 09/19/2022). In that past 52-week period, it has traded between $84.40 and $169.15.
The ETF has a beta of 1.94 and standard deviation of 56.64% for the trailing three-year period, making it a high risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
SPDR S&P Oil & Gas Exploration & Production 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, XOP 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.
Invesco Dynamic Energy Exploration & Production ETF (
PXE Quick Quote PXE - Free Report) tracks Dynamic Energy Exploration & Production Intellidex Index and the iShares U.S. Oil & Gas Exploration & Production ETF ( IEO Quick Quote IEO - Free Report) tracks Dow Jones U.S. Select Oil Exploration & Production Index. Invesco Dynamic Energy Exploration & Production ETF has $281.61 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $979 million. PXE has an expense ratio of 0.63% and IEO charges 0.39%. Bottom Line
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Zacks ETF Center.