What is the best ETF for energy?

On this list, the Vanguard Energy Index ETF has the highest three-year return: 114.28%. If you plan to invest in clean energy , this may not be a good choice, however. Ultimately, the best energy ETF for you depends on many factors, like your risk tolerance, personal preference and goals.

What is the largest energy ETF?

The Energy Select Sector SPDR Fund (XLE) is the largest ETF in terms of total assets and average volume.

Is the Vanguard Energy ETF a good investment?

The Vanguard Energy ETF has a low expense ratio, as well as strong returns. It also holds the second most in total assets, behind Energy Select Sector SPDR Fund. For these reasons, Vanguard may be a good choice.

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9 Best Energy ETFs To Buy for May 2024

May 14, 2024

9 min Read

Written by Daria Uhlig

Edited by Melanie Grafil

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Energy exchange-traded funds are similar to other ETFs — they invest in securities based on a specific index, sector, commodity or other category of assets. Therefore, an energy ETF focuses on energy-related securities, such as oil, gas or clean energy companies.

Energy stocks appear to be bouncing back after a challenging 2023. “The S&P 500 energy sector has significantly outpaced the broader S&P 500 in the year’s first 3-1/2 months,” according to a U.S. Bank analysis. This is good news for investors looking to implement a growth strategy using ETF investments.

Key Takeaways

Sixty energy ETFs trade on U.S. markets. They manage a total of $91.83 billion in assets, according to ETF.com.
A single ETF, the Energy Select Sector SPDR Fund, manages over 40% of that $91.83 billion in assets, making it the largest energy ETF.
Of the nine energy ETFs included in this roundup, the Vanguard Energy Index ETF has the highest three-year return: 114.28%.
The Fidelity MSCI Energy Index ETF (FENY) has the lowest expense ratio of any energy ETF.

Top 9 Energy ETFs

Here are nine of the best ETFs for energy. Keep reading to learn about some of their main holdings, how much they are worth and how they grew in 2024.

Energy Select Sector SPDR Fund (XLE)
Invesco S&P 500 ETF (RYE)
VanEck Oil Services ETF (OIH)
iShares U.S. Oil & Gas Exploration & Production ETF (IEO)
iShares U.S. Energy ETF (IYE)
Vanguard Energy Index ETF (VDE)
Fidelity MSCI Energy Index ETF (FENY)
iShares Global Energy ETF (IXC)
iShares U.S. Oil Equipment & Services ETF (IEZ)

1. Energy Select Sector SPDR Fund (XLE)

Price: $92.08
Yield: 2.92%
3-year return rate: 29.50%
Expense ratio: 0.09%
Assets under management: $39.11 million
Top holdings: Exxon Mobile, Chevron, ConocoPhillips, EOG Resources, Schlumberger

The Energy Select Sector SPDR Fund represents 23 companies from the S&P 500 that belong to the oil, gas and consumable fuels or energy equipment and services industries. Some of the fund’s top holdings include blue-chip stocks. Of 60 energy ETFs currently traded on U.S. markets, the Energy Select Sector SPDR Fund is the largest, according to ETF.com. It also has one of the lowest expense ratios, second only to the Fidelity MSCI Energy Index ETF, which also is included in this roundup.

The fund’s year to date (YTD) daily total return is 13.50%.

2. Invesco S&P 500 Equal Weight Energy ETF (RYE)

Price: $80.07
Yield: 2.58%
3-year return rate: N/A
Expense ratio: 0.40%
Assets under management: $590.5 million
Top 5 holdings: EOG Resources, ConocoPhillips, Devon Energy, Pioneer Natural Resources, Targa Resources

The Invesco S&P 500 Equal Weight Energy ETF holds companies from the S&P 500 Equal Weight Energy Plus Index. Whereas the S&P 500 index is weighted by market capitalization, giving larger companies more influence over the index, the S&P 500 Equal Weight Energy Plus Index weighs each company equally, at 0.2% of the total index.

About 90% of the fund’s $590.5 million in assets are invested in common stocks included in the index. The YTD monthly total return for the Invesco S&P 500 Equal Weight Energy ETF is 13.43%.

3. VanEck Oil Services ETF (OIH)

Price: $308.60
Yield: 1.16%
3-year return rate: 22.04%
Expense ratio: 0.35%
Assets under management: $1.93 billion
Top 5 holdings: Schlumberger, Halliburton, Baker Hughes, Weatherford International, Technipfmc

The VanEck Oil Services ETF is based on the MVIS U.S. Listed Oil Services 25 Index. Its holdings are meant to get close to price and yield performance of the MVIS index of U.S.-traded companies involved in oil equipment, oil services or oil drilling. The energy ETF’s holdings include some of the largest, most liquid companies. Over 85% are American companies. The rest are based in the Netherlands, U.K. and Bermuda.

OIH’s YTD return is 8.74%.

4. iShares U.S. Oil & Gas Exploration & Production ETF (IEO)

Price: $102.51
Yield: 2.19%
3-year return rate: 34.44%
Expense ratio: 0.40%
Assets under management: $855.93 million
Top 5 holdings: ConocoPhillips, EOG Resources, Marathon Petroleum, Phillips, Pioneer Natural Resources

The iShares U.S. Oil & Gas Exploration & Production ETF tracks an index made up of oil and gas exploration and production companies. It has 46 holdings, which is more than some other ETFs. About 75% are oil and gas exploration and production companies, and about 25% are oil and gas refining, marketing and transportation companies. The fund has a YTD return of 15.44%.

5. iShares U.S. Energy ETF (IYE)

Price: $48.11
Yield: 2.55%
3-year return rate: 108.19%
Expense ratio: 0.40%
Assets under management: $1.33 billion
Top 5 holdings: Exxon Mobile, Chevron, ConocoPhillips, EOG Resources, Schlumberger

The iShares U.S. Energy ETF is made up of companies that represent the general U.S. energy sector, such as blue-chip energy stocks including Exxon Mobil Corp. and Chevron Corp, which make up 22.99% and 14.97% of the fund’s assets, respectively. The fund invests at least 80% of its assets into its primary holdings and companies that are similar by economic standards.

The iShares U.S. Energy ETF is a strong performer over three years, and its YTD gains are nearly 13%.

6. Vanguard Energy Index ETF (VDE)

Price: $128.25
Yield: 2.67%
3-year return rate: 114.28%
Expense ratio: 0.10%
Assets under management: $10.60 billion
Top 5 holdings: Exxon Mobile, Chevron, ConocoPhillips, Schlumberger, Marathon Petroleum

The Vanguard Energy Index ETF is potentially a good buy, as it tries to create an investment return similar to the MSCI US Investable Market Index/Energy 25/50, an index of stocks in the energy industry. It does this by replicating the index in terms of holdings and weightings, which means the fund is passively managed.

The Vanguard Energy Index ETF is the second-largest energy ETF by assets, according to ETF.com, and it has the third-lowest expense ratio.

7. Fidelity MSCI Energy Index ETF (FENY)

Price: $25.28
Yield: 2.66%
3-year return rate: 29.58%
Expense ratio: 0.084%
Assets under management: $1.82 billion
Top 5 holdings: Exxon Mobile, Chevron, ConocoPhillips, Schlumberger, Marathon Petroleum

The Fidelity MSCI Energy Index ETF invests at least 80% of its assets in securities that are included in the MSCI USA IMI Energy Index, which represents the entire energy sector in the U.S. equity market. The fund’s strategy is to invest in a sampling of companies included in the index so that the ETF portfolio has similar investment characteristics, fundamental characteristics and liquidity measures to the index. Its top two holdings, Exxon Mobil Corp. and Chevron Corp., make up over one-third of the portfolio.

The Fidelity MSCI Energy Index ETF is one of the few in this roundup whose net assets have increased in the last 15 months. It has the lowest expense ratio of any energy ETF, according to ETF.com, and with a minimum investment of just $1, it might be the most accessible to investors.

8. iShares Global Energy ETF (IXC)

Price: $42.53
Yield: 3.20%
3-year return rate: 25.31
Expense ratio: 0.44%
Assets under management: $3.5 billion
Top 5 holdings: Exxon Mobile, Chevron, Shell, TotalEnergies, ConocoPhillips

The iShares Global Energy ETF is an energy ETF that has over 60 holdings consisting of energy companies in the U.S (59.78%), the U.K. (11.81%), Canada (11.77%) and other countries throughout the world. More than half of its holdings are in the integrated oil and gas sector, and over 20% are in oil and gas exploration and production.

IXC has returned 9.70% so far this year. Although its YTD and three-year returns are lower than those of most other ETFs in this roundup, IXC has the highest yield.

9. iShares U.S. Oil Equipment & Services ETF (IEZ)

Price: $21.82
Yield: 1.03%
3-year return rate: 21.91%
Expense ratio: 0.40%
Assets under management: $262.91 million
Top 5 holdings: Schlumberger, Halliburton, TechnipFMC, Weatherford International, Baker Hughes

The iShares U.S. Oil Equipment & Services ETF includes 35 U.S. holdings, 83% of which are from the oil equipment and services sector, with the remainder in oil and gas drilling. At least 80% of the fund’s assets typically are invested in the fund’s primary holdings and other companies that are economically similar.

The iShares U.S. Oil Equipment & Services ETF is more affordable than some other options, with a 52-week price range of $17.22 to $25.39. The YTD return for the fund is 8.26%.

Do Energy ETFs Pay Dividends?

Energy ETFs pay dividends if the stocks they hold pay them. The dividends land in the portfolio, and the ETF either distributes them to shareholders on a regular schedule, such as monthly, quarterly or semi-annually, or reinvests them back into the fund. Whereas dividend distributions pay out cash to you, dividend reinvestments purchase additional ETF shares.

Dividend distributions can provide regular income, but they’re not guaranteed. Also, it’s important to remember that you’ll have to pay tax on distributions in the year you receive them, as Schwab notes on its website. Talk with a tax professional before investing in ETFs if you have questions or concerns about the tax implications of receiving dividends.

Final Take

While some ETFs allow for diversification that can help minimize risk, others rely on targeted sectors, which can actually increase risk.

As with all investments, it’s crucial that you do your research before choosing an energy ETF to invest in. One good way to start is to decide whether you want to focus on traditional energy ETFs or clean energy ETFs, based on both your investment goals and personal preference. Then, you can open a brokerage account to start investing.

FAQ

What is the best ETF for energy?
- On this list, the Vanguard Energy Index ETF has the highest three-year return: 114.28%. If you plan to invest in clean energy, this may not be a good choice, however. Ultimately, the best energy ETF for you depends on many factors, like your risk tolerance, personal preference and goals.
What is the largest energy ETF?
- The Energy Select Sector SPDR Fund (XLE) is the largest ETF in terms of total assets and average volume.
Is the Vanguard Energy ETF a good investment?
- The Vanguard Energy ETF has a low expense ratio, as well as strong returns. It also holds the second most in total assets, behind Energy Select Sector SPDR Fund. For these reasons, Vanguard may be a good choice.

Taylor DeJesus contributed to the reporting for this article.

Prices are accurate as of market close on May 2, 2024.

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