Making its debut on 06/19/2006, smart beta exchange traded fund SPDR S&P Oil & Gas Equipment & Services ETF (XES) provides investors broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. XES has been able to amass assets over $227.08 million, making it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P Oil & Gas Equipment & Services Select Industry Index.
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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.
XES's 12-month trailing dividend yield is 1.11%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Energy sector.
Looking at individual holdings, Baker Hughes Co (BKR) accounts for about 5.47% of total assets, followed by Helmerich + Payne (HP) and Cactus Inc A (WHD).
Its top 10 holdings account for approximately 50.04% of XES's total assets under management.
Performance and Risk
The ETF has added roughly 1.63% and is up about 3.36% so far this year and in the past one year (as of 11/29/2024), respectively. XES has traded between $76.26 and $98.48 during this last 52-week period.
The fund has a beta of 1.73 and standard deviation of 38.91% for the trailing three-year period, which makes XES a high risk choice in this particular space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Oil & Gas Equipment & Services ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares U.S. Oil Equipment & Services ETF (IEZ) tracks Dow Jones U.S. Select Oil Equipment & Services Index and the VanEck Oil Services ETF (OIH) tracks MVIS U.S. Listed Oil Services 25 Index. IShares U.S. Oil Equipment & Services ETF has $162.53 million in assets, VanEck Oil Services ETF has $1.87 billion. IEZ has an expense ratio of 0.40% 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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Get it free >>SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
Helmerich & Payne, Inc. (HP) : Free Stock Analysis Report
Baker Hughes Company (BKR) : Free Stock Analysis Report
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
VanEck Oil Services ETF (OIH): ETF Research Reports
Cactus, Inc. (WHD) : 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.
