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Is SPDR S&P Oil & Gas Exploration & Production ETF (XOP) a Strong ETF Right Now?
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Launched on 06/19/2006, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is a smart beta exchange traded fund offering broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. XOP has been able to amass assets over $3.76 billion, making it one of the largest ETFs in the Energy ETFs. 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.35% for XOP, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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.
Taking into account individual holdings, Texas Pacific Land Corporation (TPL - Free Report) accounts for about 2.93% of the fund's total assets, followed by Phillips 66 (PSX - Free Report) and Apa Corp. (APA - Free Report) .
XOP's top 10 holdings account for about 22.07% of its total assets under management.
Performance and Risk
So far this year, XOP has gained about 1.85%, and is up roughly 13.39% in the last one year (as of 03/07/2023). During this past 52-week period, the fund has traded between $112.38 and $169.15.
The ETF has a beta of 1.90 and standard deviation of 56.45% for the trailing three-year period, making it a high risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Oil & Gas Exploration & Production ETF is not a suitable option for investors seeking to outperform the Energy ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) tracks Dynamic Energy Exploration & Production Intellidex Index and the iShares U.S. Oil & Gas Exploration & Production ETF (IEO - Free Report) tracks Dow Jones U.S. Select Oil Exploration & Production Index. Invesco Dynamic Energy Exploration & Production ETF has $212.85 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $965.54 million. PXE has an expense ratio of 0.63% and IEO charges 0.39%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy ETFs.
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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Is SPDR S&P Oil & Gas Exploration & Production ETF (XOP) a Strong ETF Right Now?
Launched on 06/19/2006, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is a smart beta exchange traded fund offering broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. XOP has been able to amass assets over $3.76 billion, making it one of the largest ETFs in the Energy ETFs. 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.35% for XOP, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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.
Taking into account individual holdings, Texas Pacific Land Corporation (TPL - Free Report) accounts for about 2.93% of the fund's total assets, followed by Phillips 66 (PSX - Free Report) and Apa Corp. (APA - Free Report) .
XOP's top 10 holdings account for about 22.07% of its total assets under management.
Performance and Risk
So far this year, XOP has gained about 1.85%, and is up roughly 13.39% in the last one year (as of 03/07/2023). During this past 52-week period, the fund has traded between $112.38 and $169.15.
The ETF has a beta of 1.90 and standard deviation of 56.45% for the trailing three-year period, making it a high risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Oil & Gas Exploration & Production ETF is not a suitable option for investors seeking to outperform the Energy ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) tracks Dynamic Energy Exploration & Production Intellidex Index and the iShares U.S. Oil & Gas Exploration & Production ETF (IEO - Free Report) tracks Dow Jones U.S. Select Oil Exploration & Production Index. Invesco Dynamic Energy Exploration & Production ETF has $212.85 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $965.54 million. PXE has an expense ratio of 0.63% and IEO charges 0.39%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy ETFs.
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.