Should You Invest in the Vanguard Energy Index Fund ETF Shares (VDE)?

Looking for broad exposure to the Energy - Broad segment of the equity market? You should consider the Vanguard Energy Index Fund ETF Shares (VDE), a passively managed exchange traded fund launched on September 23, 2004.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Vanguard. It has amassed assets over $10.66 billion, making it one of the largest ETFs attempting to match the performance of the Energy - Broad segment of the equity market. VDE seeks to match the performance of the MSCI US Investable Market Energy 25/50 Index before fees and expenses.

The MSCI US Investable Market Index (IMI)/Energy 25/50 is made up of stocks of large, mid-size, and small U.S. companies within the energy sector.

Costs

Expense 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 0.09%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.3%.

Sector Exposure and Top Holdings

It 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.Looking at individual holdings, Exxonmobil Holdings Corp accounts for about 21.52% of total assets, followed by Chevron Corp (CVX) and Conocophillips (COP).

The top 10 holdings account for about 34.95% of total assets under management.

Performance and Risk

Year-to-date, the Vanguard Energy Index Fund ETF Shares has gained about 40.67% so far, and it's up approximately 44.29% over the last 12 months (as of 08/26/2026). VDE has traded between $120.37 and $179.72 in this past 52-week period.

The ETF has a beta of 0.43 and standard deviation of 21.54% for the trailing three-year period, making it a high risk choice in the space. With about 114 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Energy Index Fund ETF Shares holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VDE is an outstanding 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.

iShares Global Energy ETF (IXC) tracks S&P Global 1200 Energy Sector Index and the State Street Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. iShares Global Energy ETF has $2.80 billion in assets, State Street Energy Select Sector SPDR ETF has $41.03 billion. IXC has an expense ratio of 0.4%, and XLE charges 0.08%.

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.

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

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