Is the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) Currently a Top ETF Choice?

Overview of the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

Launched on June 19, 2006, the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is a smart beta exchange-traded fund designed to offer investors broad access to the Energy ETF sector.

Understanding Smart Beta ETFs

Traditionally, the ETF market has been led by funds that track market capitalization-weighted indexes, which are intended to mirror the performance of the overall market or specific segments. These indexes are ideal for those who believe in the efficiency of markets, offering a cost-effective, straightforward, and transparent way to achieve market-like returns.

However, some investors aim to outperform the market by selecting superior stocks. For these individuals, smart beta funds—which follow alternative, non-market cap weighted strategies—may be more appealing. These strategies often select stocks based on fundamental factors or a blend of characteristics, aiming for improved risk-adjusted returns.

Smart beta ETFs come in many forms, from simple equal-weighted approaches to more complex methodologies based on fundamentals or volatility. Despite the variety, not all smart beta strategies have consistently delivered strong results.

Fund Management and Benchmark

Managed by State Street Investment Management, XOP has accumulated assets exceeding $2.77 billion, ranking it among the largest Energy ETFs. The fund seeks to replicate the performance of the S&P Oil & Gas Exploration & Production Select Industry Index, before fees and expenses. XOP

This benchmark index focuses on the oil and gas exploration and production segment within the broader S&P Total Markets Index, which includes all U.S. common stocks listed on major exchanges. The index uses a modified equal-weighting approach.

Fees and Expenses

Expense ratios play a crucial role in an ETF’s total return, with lower-cost funds often outperforming pricier alternatives over time, assuming other factors are equal.

XOP’s annual operating expense ratio stands at 0.35%, positioning it among the more affordable options in its category. The fund also offers a trailing 12-month dividend yield of 2.08%.

Sector Allocation and Major Holdings

ETFs provide diversification, reducing the risk associated with individual stocks. Examining a fund’s holdings can offer valuable insights, and most ETFs, including XOP, are transparent about their portfolios.

XOP is almost entirely invested in the Energy sector. Its largest individual holding is Venture Global Inc Cl A (VG), which makes up roughly 3.98% of assets, followed by Exxon Mobil Corp (XOM) and Texas Pacific Land Corp (TPL). The top ten holdings collectively represent about 29.85% of the fund’s total assets.

Performance and Risk Profile

Over the past year (as of March 4, 2026), XOP has returned approximately 25.92%, with a year-to-date gain of about 30.28%. During the last 52 weeks, its price has ranged from $101.91 to $159.56.

The fund’s three-year beta is 0.72, and its standard deviation is 27.53%, indicating a relatively high level of risk. With around 53 holdings, XOP provides diversification to help mitigate company-specific risk.

Other ETF Options

Investors seeking to outperform the Energy ETF sector may want to consider alternatives to XOP. For example, the Portfolio Building Block Integrated Oil & Gas and Exp and Prod Index ETF (PBOG) tracks the BITA GLOBAL OIL & GAS SELECT INDEX, while the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) follows the Dow Jones U.S. Select Oil Exploration & Production Index. PBOG manages $404.27 million in assets with a 0.13% expense ratio, and IEO holds $534.38 million with a 0.38% expense ratio.

For those prioritizing lower costs and reduced risk, traditional market cap-weighted ETFs that aim to mirror the Energy sector’s returns may be preferable.

Conclusion

To explore more about XOP and other ETFs, use screening tools to find products that align with your investment goals and stay updated with the latest ETF news and analysis at the Zacks ETF Center.

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

This article was first published by Zacks Investment Research (zacks.com).

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