9 Best Energy ETFs To Buy Now for 2023
Written by
Taylor DeJesus
Edited by
Amber Barkley
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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.
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 2022.
1. Energy Select Sector SPDR Fund (XLE)
- Price: $84.40
- Assets: $43.03 billion
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, such as Exxon Mobile Corp., Chevron Corp., ConocoPhillips and EOG Resources Inc. The Energy Select Sector SPDR Fund is the largest energy ETF with over $43 billion in assets.
The fund’s year to date (YTD) daily total return is 64.29%. The expense ratio for the Energy Select Sector SPDR Fund is 0.10% or the equivalent of paying $10 per $10,000 for fund management.
2. Invesco S&P 500 Equal Weight Energy ETF (RYE)
- Price: $69.80
- Assets: $621.1 million
The Invesco S&P 500 Equal Weight Energy ETF holds companies from the S&P 500 Equal Weight Energy Plus Index, including Schlumberger Ltd., Halliburton Co. and APA Corp. About 90% of the fund’s $621 million in assets are invested in common stocks, which are all equally weighted. The YTD daily total return for the Invesco S&P 500 Equal Weight Energy ETF is 57.81% with an expense ratio of 0.40%.
3. VanEck Oil Services ETF (OIH)
- Price: $289.59
- Assets: $2.67 billion
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 the MVIS index’s price and yield performance. The energy ETF’s holdings include some of the largest, most liquid companies that originate in the U.S. and foreign countries, as long as they are listed on the MVIS index, such as Schlumberger Ltd., Halliburton Co., Baker Hughes Co. and TechnipFMC Plc.
The total assets being held by the VanEck Oil Services ETF are about $2.67 billion. Its YTD daily total return is 66.25% with an expense ratio of 0.35%.
4. iShares U.S. Oil & Gas Exploration & Production ETF (IEO)
- Price: $88.27
- Assets: $1.22 billion
The iShares U.S. Oil & Gas Exploration & Production ETF tracks an index made up of oil and gas exploration and production companies. It has more holdings than some other ETFs, made up of 49 companies that include ConocoPhillips and EOG Resources Inc. The fund has over $1 billion in assets, a YTD daily total return of 57.99% and an expense ratio of 0.39%.
5. iShares U.S. Energy ETF (IYE)
- Price: $44.67
- Assets: $2.4 billion
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 20.97% and 16.34% 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 has $2.4 billion in assets. The price has risen considerably in the last year, with a 52-week range of $31.69 – $50.75. The YTD daily total return is 60.36%, and the expense ratio is 0.39%.
6. Vanguard Energy Index ETF (VDE)
- Price: $116.47
- Assets: $11.02 billion
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 weighing each stock similar to the index and trying to invest all of its assets in those stocks.
The Vanguard Energy Index ETF has over $11 billion in net assets and a YTD daily total return of 61.84%. The expense ratio is 0.10%, which is much lower than the average for similar funds.
7. Fidelity MSCI Energy Index ETF (FENY)
- Price: $22.89
- Assets: $1.74 billion
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. The fund remains representative of the MSCI index by choosing stocks that have similar investment characteristics, fundamental characteristics and liquidity measures similar to the index. Some of its top holdings include Exxon Mobil Corp. and Chevron Corp.
The Fidelity MSCI Energy Index ETF has $1.74 billion in assets, and the YTD daily return is 63.13%. It has a low expense ratio of 0.08%.
8. iShares Global Energy ETF (IXC)
- Price: $37.73
- Assets: $2.25 billion
The iShares Global Energy ETF is an energy ETF that has over 60 holdings consisting of energy companies from all over the world, such as Exxon Mobil Corp. and Shell Plc. The fund has over $2 billion in assets with a YTD daily total return of 47.30% and an expense ratio of 0.40%.
9. iShares U.S. Oil Equipment & Services ETF (IEZ)
- Price: $20.20
- Assets: $327.04 million
The iShares U.S. Oil Equipment & Services ETF includes 26 holdings from the oil equipment and services industry, such as Schlumberger Ltd., Halliburton Co., TechnipFMC Plc. and ChampionX Corp. The fund has over $327 million in assets, and at least 80% of those assets are generally 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 $13.47 – $22.18. The YTD total daily return for the fund is 65.77%. The ETF has a 0.39% expense ratio.
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 VanEck Oil Services ETF (OIH) is currently the highest performing, as far as YTD returns go. 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 buy?
- The Vanguard Energy ETF has a very low expense ratio, as well as decent 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.
Prices are accurate as of market close on Jan. 3, 2023.
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