Is State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) a Strong ETF Right Now?

The State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides broad exposure to the Energy ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

XOP is managed by State Street Investment Management, and this fund has amassed over $2.77 billion, which makes it one of the largest ETFs in the Energy ETFs. XOP, before fees and expenses, seeks to match the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

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 U.S. 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 Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for XOP are 0.35%, which makes it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 2.08%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 100% of the portfolio.

Taking into account individual holdings, Venture Global Inc Cl A (VG) accounts for about 3.98% of the fund's total assets, followed by Exxon Mobil Corp (XOM) and Texas Pacific Land Corp (TPL).

The top 10 holdings account for about 29.85% of total assets under management.

Performance and Risk

The ETF has gained about 25.92% and was up about 30.28% so far this year and in the past one year (as of 03/04/2026), respectively. XOP has traded between $101.91 and $159.56 during this last 52-week period.

The fund has a beta of 0.72 and standard deviation of 27.53% for the trailing three-year period, which makes XOP a high risk choice in this particular space. With about 53 holdings, it effectively diversifies company-specific risk .

Alternatives

State Street SPDR S&P Oil & Gas Exploration & Production ETF is not a suitable option for investors seeking to outperform the Energy ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

Portfolio Building Block Integrated Oil & Gas and Exp and Prod Index ETF (PBOG) tracks BITA GLOBAL OIL & GAS SELECT INDEX and the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) tracks Dow Jones U.S. Select Oil Exploration & Production Index. Portfolio Building Block Integrated Oil & Gas and Exp and Prod Index ETF has $404.27 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $534.38 million. PBOG has an expense ratio of 0.13% and IEO changes 0.38%.

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.

Boost Your Portfolio with Our Top ETF Insights

Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.

Don’t miss out on this valuable resource. It’s free!

Get it now >>

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

State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research