Should You Invest in the SPDR S&P Oil & Gas Exploration & Production ETF (XOP)?

Launched on 06/19/2006, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Exploration segment of the equity market.Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 8, placing it in top 50%.Index DetailsThe fund is sponsored by State Street Global Advisors. It has amassed assets over $2.01 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.CostsExpense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 2.62%.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.This ETF has heaviest allocation in the Energy sector--about 98.50% of the portfolio.Looking at individual holdings, Antero Resources Corp (AR) accounts for about 3.32% of total assets, followed by Eqt Corp (EQT) and Texas Pacific Land Corp (TPL).The top 10 holdings account for about 30.15% of total assets under management.Performance and RiskSo far this year, XOP has lost about -6.42%, and is down about -9.74% in the last one year (as of 03/05/2025). During this past 52-week period, the fund has traded between $123.87 and $160.59.The ETF has a beta of 1.64 and standard deviation of 32.09% for the trailing three-year period, making it a high risk choice in the space. With about 56 holdings, it effectively diversifies company-specific risk.AlternativesSPDR 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 $88.05 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $548.75 million. PXE has an expense ratio of 0.63% and IEO charges 0.40%.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 Antero Resources Corporation (AR): 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 ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks