Designed to provide broad exposure to the Energy - Exploration segment of the equity market, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is a passively managed exchange traded fund launched on 06/19/2006.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Exploration is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $2.26 billion, making it one of the largest ETFs attempting to match the performance of the Energy - Exploration segment of the equity market. XOP seeks to match the performance of the S&P Oil & Gas Exploration & Production Select Industry Index before fees and expenses.
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.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.52%.
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 99.70% of the portfolio.
Looking at individual holdings, Texas Pacific Land Corp (TPL) accounts for about 4.37% of total assets, followed by Cnx Resources Corp (CNX) and Eqt Corp (EQT).
The top 10 holdings account for about 32.38% of total assets under management.
Performance and Risk
So far this year, XOP has lost about -3.75%, and is down about -6.19% in the last one year (as of 12/30/2024). During this past 52-week period, the fund has traded between $125.50 and $160.59.
The ETF has a beta of 1.70 and standard deviation of 32.93% for the trailing three-year period, making it a high risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Oil & Gas Exploration & Production ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XOP 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.
Invesco Energy Exploration & Production ETF (PXE) tracks Dynamic Energy Exploration & Production Intellidex Index and the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) tracks Dow Jones U.S. Select Oil Exploration & Production Index. Invesco Energy Exploration & Production ETF has $97.90 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $553.72 million. PXE has an expense ratio of 0.63% and IEO charges 0.40%.
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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SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports
EQT Corporation (EQT) : Free Stock Analysis Report
CNX Resources Corporation. (CNX) : Free Stock Analysis Report
iShares U.S. Oil & Gas Exploration & Production ETF (IEO): ETF Research Reports
Invesco Energy Exploration & Production ETF (PXE): ETF Research Reports
Texas Pacific Land Corporation (TPL) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
