Over the last year, the energy sector has performed significantly better than the broader market. This growth can be attributed to Russia's invasion of Ukraine, inflation, and other factors. In the same period, three leading energy ETFs have outperformed the market. These ETFs are Invesco Dynamic Energy Exploration & Production ETF, iShares U.S. Oil & Gas Exploration & Production ETF, and Energy Select Sector SPDR Fund. ConocoPhillips is the top holding for the first two funds, while Exxon Mobil Corp is the top holding for the third.
Basics
In the aftermath of a summer price drop, investors seeking to harness the momentum of oil and gas price surges can consider three leading oil and gas company exchange-traded funds (ETFs), which have delivered impressive gains of up to 73% in the past year.
Among these options, the Invesco Dynamic Energy Exploration & Production ETF, the iShares U.S. Oil & Gas Exploration & Production ETF, and the Energy Select Sector SPDR Fund all concentrate on oil and gas equities, steering clear of the underlying commodities or associated futures contracts. In the U.S. market, there exists a selection of 30 oil and gas stock ETFs for trading, excluding inverse and leveraged ETFs, as well as funds managing less than $50 million in assets.
Invesco Dynamic Energy Exploration & Production ETF (PXE)
- 1-Year Change: +7.4%
- Expense Ratio: 0.63%
- Dividend Yield: 2.3%
- Avg. Daily Volume (3 months): 69,201
- AUM: $172M
- Inception Date: Oct. 26, 2005
- Issuer: Invesco
PXE tracks the Dynamic Energy Exploration & Production Intellidex index, consisting of 30 U.S. energy companies. These companies are chosen based on investment criteria such as price and earnings momentum, quality, management action, and value. The fund invests primarily in these securities, providing exposure to oil and gas exploration, extraction, and production, including petroleum refining, natural gas processing, and natural gas liquid (NGL) manufacturing. It employs a blended strategy, targeting growth and value stocks of various market capitalizations. Top Holdings: ConocoPhillips (COP), Diamondback Energy Inc. (FANG), Marathon Petroleum Corp. (MPC).
iShares U.S. Oil & Gas Exploration & Production ETF (IEO)
- 1-Year Change: +8%
- Expense Ratio: 0.4%
- Dividend Yield: 2.98%
- Avg. Daily Volume (3 months): 166,334
- AUM: $927M
- Inception Date: May 1, 2006
- Issuer: BlackRock Financial Management
IEO follows the Dow Jones U.S. Select Oil Exploration & Production Index, focusing on U.S. oil and gas exploration and production equities. The ETF provides exposure to companies involved in the exploration, production, and distribution of oil and gas. Its strategy combines growth and value stocks of various market capitalizations. Top Holdings: ConocoPhillips, EOG Resources Inc. (EOG), Pioneer Natural Resources Co. (PXD).
Energy Select Sector SPDR Fund (XLE)
- 1-Year Change: +11.6%
- Expense Ratio: 0.10%
- Dividend Yield: 3.39%
- Avg. Daily Volume (3 months): 19,788,482
- AUM: $38.22B
- Inception Date: Dec. 16, 1998
- Issuer: State Street
XLE tracks the Energy Select Sector Index, comprising U.S. companies in the oil, gas, consumable fuel, energy equipment, and services sectors. It allocates over 90% of its assets to oil, gas, and consumable fuels companies, with the remainder in energy equipment and services. Top Holdings: Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), and Schlumberger Ltd. (SLB).
Conclusion
The energy sector's strong performance over the past year can be attributed to various factors, including geopolitical events and inflation. Three top-performing energy ETFs, Invesco Dynamic Energy Exploration & Production ETF, iShares U.S. Oil & Gas Exploration & Production ETF, and Energy Select Sector SPDR Fund, have outpaced the broader market, focusing on oil and gas equities.
Notably, ConocoPhillips features prominently in the top holdings of the first two funds, while Exxon Mobil Corp. holds a significant position in the third. These ETFs offer a potential avenue for capitalizing on the dynamic energy market.