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Should You Invest in the State Street Energy Select Sector SPDR ETF (XLE)?

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The State Street Energy Select Sector SPDR ETF (XLE - Free Report) was launched on December 16, 1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Energy - Broad segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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 2, placing it in top 13%.

Index Details

The fund is sponsored by State Street Investment Management. It has amassed assets over $46.1 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

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 0.08%, making it the least expensive product in the space.

It has a 12-month trailing dividend yield of 2.2%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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.

Looking at individual holdings, Exxonmobil Holdings Corp (XOM) accounts for about 23.53% of total assets, followed by Chevron Corp (CVX) and Conocophillips (COP).

The top 10 holdings account for about 78.08% of total assets under management.

Performance and Risk

So far this year, XLE has added about 57.64%, and it's up approximately 59.27% in the last one year (as of 10/26/2026). During this past 52-week period, the fund has traded between $43.595 and $69.33.

The ETF has a beta of 0.48 and standard deviation of 21.37% for the trailing three-year period, making it a high risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.

Alternatives

State Street Energy Select Sector SPDR 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, XLE is a great 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.

iShares Global Energy ETF (IXC) tracks S&P Global 1200 Energy Sector Index and the Vanguard Energy Index Fund ETF Shares (VDE) tracks MSCI US Investable Market Energy 25/50 Index. iShares Global Energy ETF has $3.43 billion in assets, Vanguard Energy Index Fund ETF Shares has $11.64 billion. IXC has an expense ratio of 0.37%, and VDE charges 0.09%.

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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