Is SPDR S&P Oil & Gas Exploration & Production ETF (XOP) a Strong ETF Right Now?
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Designed to provide broad exposure to the Energy ETFs category of the market, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is a smart beta exchange traded fund launched on 06/19/2006.What Are Smart Beta ETFs?For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.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 & IndexManaged by State Street Global Advisors, XOP has amassed assets over $2.19 billion, making it one of the largest ETFs in the Energy ETFs. 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.Cost & Other ExpensesSince cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.Operating expenses on an annual basis are 0.35% for XOP, making it one of the least expensive products in the space.It has a 12-month trailing dividend yield of 1.94%.Sector Exposure and Top HoldingsIt 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.XOP's heaviest allocation is in the Energy sector, which is about 99.80% 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).Its top 10 holdings account for approximately 32.38% of XOP's total assets under management.Performance and RiskYear-to-date, the SPDR S&P Oil & Gas Exploration & Production ETF has lost about -6.56% so far, and is down about -8% over the last 12 months (as of 12/20/2024). XOP has traded between $125.50 and $160.59 in this past 52-week period.XOP has a beta of 1.70 and standard deviation of 33.08% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.AlternativesSPDR S&P Oil & Gas Exploration & Production ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which 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 $99.19 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $553.22 million. PXE has an expense ratio of 0.60% and IEO charges 0.40%.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 LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report 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 ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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