We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is SPDR S&P Oil & Gas Exploration & Production ETF (XOP) a Strong ETF Right Now?
Read MoreHide Full Article
Designed to provide broad exposure to the Energy ETFs category of the market, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is a smart beta exchange traded fund launched on 06/19/2006.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. XOP has been able to amass assets over $3.26 billion, making it one of the largest ETFs in the Energy ETFs. Before fees and expenses, XOP seeks to match the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 3.21%.
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.
XOP's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
When you look at individual holdings, Pioneer Natural Resources Company (PXD - Free Report) accounts for about 2.44% of the fund's total assets, followed by Hess Corporation (HES - Free Report) and Eqt Corporation (EQT - Free Report) .
XOP's top 10 holdings account for about 21.56% of its total assets under management.
Performance and Risk
The ETF has lost about -11.49% so far this year and is down about -3.69% in the last one year (as of 05/11/2023). In the past 52-week period, it has traded between $112.38 and $169.15.
The ETF has a beta of 1.91 and standard deviation of 46.27% 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 $150.56 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $645.94 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is SPDR S&P Oil & Gas Exploration & Production ETF (XOP) a Strong ETF Right Now?
Designed to provide broad exposure to the Energy ETFs category of the market, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is a smart beta exchange traded fund launched on 06/19/2006.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. XOP has been able to amass assets over $3.26 billion, making it one of the largest ETFs in the Energy ETFs. Before fees and expenses, XOP seeks to match the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 3.21%.
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.
XOP's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
When you look at individual holdings, Pioneer Natural Resources Company (PXD - Free Report) accounts for about 2.44% of the fund's total assets, followed by Hess Corporation (HES - Free Report) and Eqt Corporation (EQT - Free Report) .
XOP's top 10 holdings account for about 21.56% of its total assets under management.
Performance and Risk
The ETF has lost about -11.49% so far this year and is down about -3.69% in the last one year (as of 05/11/2023). In the past 52-week period, it has traded between $112.38 and $169.15.
The ETF has a beta of 1.91 and standard deviation of 46.27% 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 $150.56 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $645.94 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.