Designed to provide broad exposure to the Energy ETFs category of the market, the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is a smart beta exchange traded fund launched on 06/19/2006.
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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by State Street Investment Management. It has amassed assets over $4.13 billion, making it one of the largest ETFs in the Energy ETFs. This particular fund, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 1.67%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
XOP's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
When you look at individual holdings, Pbf Energy Inc Class A (PBF) accounts for about 3.83% of the fund's total assets, followed by Par Pacific Holdings Inc (PARR) and Delek Us Holdings Inc (DK).
The top 10 holdings account for about 29.39% of total assets under management.
Performance and Risk
Year-to-date, the State Street SPDR S&P Oil & Gas Exploration & Production ETF has added about 55.61% so far, and is up about 53.65% over the last 12 months (as of 09/10/2026). XOP has traded between $123.29 $195.01 in this past 52-week period.
The fund has a beta of 0.54 and standard deviation of 27.76% for the trailing three-year period, which makes XOP a high risk choice in this particular space. With about 54 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P Oil & Gas Exploration & Production ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could 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 $485.09 million in assets, iShares U.S. Oil & Gas Exploration & Production ETF has $723.64 million. PBOG has an expense ratio of 0.13% and IEO changes 0.37%.
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.
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State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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