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Should You Invest in the Energy Select Sector SPDR ETF (XLE)?
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Launched on 12/16/1998, the Energy Select Sector SPDR ETF (XLE - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Broad segment of the equity market.
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.
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 16, placing it in bottom 0%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $34.46 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 3.88%.
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 23.26% of total assets, followed by Chevron Corporation (CVX - Free Report) and Eog Resources Inc. (EOG - Free Report) .
The top 10 holdings account for about 71.50% of total assets under management.
Performance and Risk
The ETF has lost about -3.86% and it's up approximately 18.64% so far this year and in the past one year (as of 07/20/2023), respectively. XLE has traded between $68.75 and $94.08 during this last 52-week period.
The ETF has a beta of 1.36 and standard deviation of 33.21% for the trailing three-year period, making it a high risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers.
Alternatives
Energy Select Sector SPDR ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XLE is a sufficient option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.
IShares Global Energy ETF (IXC - Free Report) tracks S&P Global 1200 Energy Sector Index and the Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index. IShares Global Energy ETF has $1.78 billion in assets, Vanguard Energy ETF has $7.48 billion. IXC has an expense ratio of 0.40% 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)?
Launched on 12/16/1998, the Energy Select Sector SPDR ETF (XLE - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Broad segment of the equity market.
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.
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 16, placing it in bottom 0%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $34.46 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 3.88%.
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 23.26% of total assets, followed by Chevron Corporation (CVX - Free Report) and Eog Resources Inc. (EOG - Free Report) .
The top 10 holdings account for about 71.50% of total assets under management.
Performance and Risk
The ETF has lost about -3.86% and it's up approximately 18.64% so far this year and in the past one year (as of 07/20/2023), respectively. XLE has traded between $68.75 and $94.08 during this last 52-week period.
The ETF has a beta of 1.36 and standard deviation of 33.21% for the trailing three-year period, making it a high risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers.
Alternatives
Energy Select Sector SPDR ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XLE is a sufficient option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.
IShares Global Energy ETF (IXC - Free Report) tracks S&P Global 1200 Energy Sector Index and the Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index. IShares Global Energy ETF has $1.78 billion in assets, Vanguard Energy ETF has $7.48 billion. IXC has an expense ratio of 0.40% 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.