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Is SPDR S&P Oil & Gas Exploration & Production ETF (XOP) a Strong ETF Right Now?
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The SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $2.42 billion, this makes it one of the largest ETFs in the Energy ETFs. XOP is managed by State Street Global Advisors. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for XOP are 0.35%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.56%.
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 99.80% of the portfolio.
When you look at individual holdings, Cnx Resources Corp (CNX - Free Report) accounts for about 3.07% of the fund's total assets, followed by Texas Pacific Land Corp (TPL - Free Report) and Expand Energy Corp (EXE - Free Report) .
XOP's top 10 holdings account for about 28.22% of its total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Oil & Gas Exploration & Production ETF has gained about 0.88% so far, and is down about -8.35% over the last 12 months (as of 10/18/2024). XOP has traded between $126.87 and $160.59 in this past 52-week period.
The ETF has a beta of 1.67 and standard deviation of 33.97% for the trailing three-year period, making it a high risk choice in the space. With about 57 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Oil & Gas Exploration & Production ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco 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 Energy Exploration & Production ETF has $117.66 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $618.62 million. PXE has an expense ratio of 0.60% and IEO charges 0.40%.
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?
The SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $2.42 billion, this makes it one of the largest ETFs in the Energy ETFs. XOP is managed by State Street Global Advisors. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for XOP are 0.35%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.56%.
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 99.80% of the portfolio.
When you look at individual holdings, Cnx Resources Corp (CNX - Free Report) accounts for about 3.07% of the fund's total assets, followed by Texas Pacific Land Corp (TPL - Free Report) and Expand Energy Corp (EXE - Free Report) .
XOP's top 10 holdings account for about 28.22% of its total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Oil & Gas Exploration & Production ETF has gained about 0.88% so far, and is down about -8.35% over the last 12 months (as of 10/18/2024). XOP has traded between $126.87 and $160.59 in this past 52-week period.
The ETF has a beta of 1.67 and standard deviation of 33.97% for the trailing three-year period, making it a high risk choice in the space. With about 57 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Oil & Gas Exploration & Production ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco 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 Energy Exploration & Production ETF has $117.66 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $618.62 million. PXE has an expense ratio of 0.60% and IEO charges 0.40%.
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.