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Is SPDR S&P Oil & Gas Equipment & Services ETF (XES) a Strong ETF Right Now?
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The SPDR S&P Oil & Gas Equipment & Services ETF (XES - 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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $308.53 million, this makes it one of the average sized ETFs in the Energy ETFs. XES is managed by State Street Global Advisors. This particular fund seeks to match the performance of the S&P Oil & Gas Equipment & Services Select Industry Index before fees and expenses.
The S&P Oil & Gas Equipment & Services Select Industry Index represents the oil and gas equipment and services sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX,NASDAQ National Market and NASDAQ Small Cap exchanges. The Oil & Gas Equipment 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.
Operating expenses on an annual basis are 0.35% for XES, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.39%.
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.
XES's heaviest allocation is in the Energy sector, which is about 99.20% of the portfolio.
When you look at individual holdings, Patterson-Uti Energy Inc. (PTEN - Free Report) accounts for about 5.69% of the fund's total assets, followed by Helmerich & Payne Inc. (HP - Free Report) and Halliburton Company (HAL - Free Report) .
The top 10 holdings account for about 48.42% of total assets under management.
Performance and Risk
The ETF return is roughly 21.04% and is down about -1.24% so far this year and in the past one year (as of 06/22/2022), respectively. XES has traded between $45.70 and $82.43 during this last 52-week period.
The ETF has a beta of 2.12 and standard deviation of 60.94% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Oil & Gas Equipment & Services 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.
IShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) tracks Dow Jones U.S. Select Oil Equipment & Services Index and the VanEck Oil Services ETF (OIH - Free Report) tracks MVIS U.S. Listed Oil Services 25 Index. IShares U.S. Oil Equipment & Services ETF has $326.67 million in assets, VanEck Oil Services ETF has $3.06 billion. IEZ has an expense ratio of 0.41% and OIH charges 0.35%.
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 Equipment & Services ETF (XES) a Strong ETF Right Now?
The SPDR S&P Oil & Gas Equipment & Services ETF (XES - 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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $308.53 million, this makes it one of the average sized ETFs in the Energy ETFs. XES is managed by State Street Global Advisors. This particular fund seeks to match the performance of the S&P Oil & Gas Equipment & Services Select Industry Index before fees and expenses.
The S&P Oil & Gas Equipment & Services Select Industry Index represents the oil and gas equipment and services sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX,NASDAQ National Market and NASDAQ Small Cap exchanges. The Oil & Gas Equipment 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.
Operating expenses on an annual basis are 0.35% for XES, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.39%.
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.
XES's heaviest allocation is in the Energy sector, which is about 99.20% of the portfolio.
When you look at individual holdings, Patterson-Uti Energy Inc. (PTEN - Free Report) accounts for about 5.69% of the fund's total assets, followed by Helmerich & Payne Inc. (HP - Free Report) and Halliburton Company (HAL - Free Report) .
The top 10 holdings account for about 48.42% of total assets under management.
Performance and Risk
The ETF return is roughly 21.04% and is down about -1.24% so far this year and in the past one year (as of 06/22/2022), respectively. XES has traded between $45.70 and $82.43 during this last 52-week period.
The ETF has a beta of 2.12 and standard deviation of 60.94% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Oil & Gas Equipment & Services 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.
IShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) tracks Dow Jones U.S. Select Oil Equipment & Services Index and the VanEck Oil Services ETF (OIH - Free Report) tracks MVIS U.S. Listed Oil Services 25 Index. IShares U.S. Oil Equipment & Services ETF has $326.67 million in assets, VanEck Oil Services ETF has $3.06 billion. IEZ has an expense ratio of 0.41% and OIH charges 0.35%.
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.