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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.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options 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 13, placing it in bottom 19%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $38.27 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
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.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.20%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 Corp (XOM - Free Report) accounts for about 26.21% of total assets, followed by Chevron Corp (CVX - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 77.84% of total assets under management.
Performance and Risk
So far this year, XLE has added roughly 10.75%, and it's up approximately 9.87% in the last one year (as of 07/30/2024). During this past 52-week period, the fund has traded between $79.91 and $98.08.
The ETF has a beta of 1.21 and standard deviation of 27.08% for the trailing three-year period, making it a high risk choice in the space. With about 25 holdings, it has more concentrated exposure than peers.
Alternatives
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 - 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 $2.17 billion in assets, Vanguard Energy ETF has $8.53 billion. IXC has an expense ratio of 0.44% 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.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options 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 13, placing it in bottom 19%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $38.27 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
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.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.20%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 Corp (XOM - Free Report) accounts for about 26.21% of total assets, followed by Chevron Corp (CVX - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 77.84% of total assets under management.
Performance and Risk
So far this year, XLE has added roughly 10.75%, and it's up approximately 9.87% in the last one year (as of 07/30/2024). During this past 52-week period, the fund has traded between $79.91 and $98.08.
The ETF has a beta of 1.21 and standard deviation of 27.08% for the trailing three-year period, making it a high risk choice in the space. With about 25 holdings, it has more concentrated exposure than peers.
Alternatives
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 - 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 $2.17 billion in assets, Vanguard Energy ETF has $8.53 billion. IXC has an expense ratio of 0.44% 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.