Looking for broad exposure to the Energy - Broad segment of the equity market? You should consider the Vanguard Energy ETF (VDE), a passively managed exchange traded fund launched on 09/23/2004.
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 - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $8.25 billion, making it one of the largest ETFs attempting to match the performance of the Energy - Broad segment of the equity market. VDE seeks to match the performance of the MSCI US Investable Market Energy 25/50 Index before fees and expenses.
The MSCI US Investable Market Index (IMI)/Energy 25/50 is made up of stocks of large, mid-size, and small U.S. companies within the energy sector.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.02%.
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, Exxon Mobil Corp (XOM) accounts for about 22.67% of total assets, followed by Chevron Corp (CVX) and Conocophillips (COP).
The top 10 holdings account for about 62.60% of total assets under management.
Performance and Risk
The ETF has gained about 15.84% so far this year and was up about 14.82% in the last one year (as of 12/03/2024). In that past 52-week period, it has traded between $111.77 and $136.78.
The ETF has a beta of 1.22 and standard deviation of 26.72% for the trailing three-year period, making it a high risk choice in the space. With about 112 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Energy 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, VDE is an outstanding 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 Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. IShares Global Energy ETF has $2.19 billion in assets, Energy Select Sector SPDR ETF has $37.51 billion. IXC has an expense ratio of 0.41% and XLE 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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Vanguard Energy ETF (VDE): ETF Research Reports
Chevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
ConocoPhillips (COP) : Free Stock Analysis Report
Energy Select Sector SPDR ETF (XLE): ETF Research Reports
iShares Global Energy ETF (IXC): ETF Research Reports
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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.
