The best energy ETFs for 2023

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Oil and gas prices soared in 2022 after Russia’s invasion of Ukraine caused economies around the world to boycott Russian resources, but have since fallen as supply s has normalized and rising interest rates have dampened demand. The Bloomberg Natural Gas Subindex has fallen 70% over the past year, while the Bloomberg Composite Crude Oil Subindex has fallen 28%.

Subsequently, the energy sector underperformed the broader market, with the S&P Energy Select Sector Index rising around 5.3%, compared to the S&P’s rise of 14.6%. 500.

Key points to remember

  • Energy stocks have generally underperformed the market over the past year, with the energy sector lagging the S&P 500 by nearly 10 percentage points.
  • Major energy ETFs include the Fidelity MSCI Energy Index ETF, the SPDR S&P Oil & Gas Equipment Services ETF and the Energy Select Sector SPDR Fund.
  • These ETFs can provide broad exposure to energy companies or more focused exposure to companies in certain sub-sectors.

About 50 energy ETFs trade in the United States, excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM).

Below, we look at the three energy ETFs with the lowest fees, the highest total return over the past year, and the most cash. All figures are as of June 22.

  • One-year performance: 15.6%
  • Expense ratio: 0.08%
  • 30-day SEC yield: 3.32%
  • 30-day average daily volume: 847,721
  • Net assets: $1.3 billion
  • Creation date: October 21, 2013
  • Issuer: Fidelity

FENY is a passively managed fund that tracks the MSCI USA IMI Energy Index, a capitalization-weighted index of large-, mid-, and small-cap energy companies. Exxon Mobil Corp. (XOM) is the fund’s largest holding, accounting for nearly 23% of the fund. FENY offers exposure primarily to North American oil and gas companies, but a small portion of the fund is dedicated to energy equipment.

  • One-year performance: 29.8%
  • Expense ratio: 0.35%
  • 30-day SEC yield: 0.51%
  • 30-day average daily volume: 85,094
  • Net assets: $261.6 million
  • Date of creation: June 19, 2006
  • Issuer: State Street Global Advisors

XES tracks the S&P Oil & Gas Equipment & Services Select Industry Index. The fund is a modified equally-weighted fund, which means that small-cap stocks have more influence on the fund’s returns than they would in a cap-weighted fund holding the same stocks. The outsized influence of small-cap stocks in XES makes it inherently riskier relative to other funds, which may appeal to investors looking for greater upside potential in the energy market.

  • One-year performance: 14.8%
  • Expense ratio: 0.10%
  • 30-day SEC yield: 3.76%
  • Average daily volume over 30 days: 20,217,487
  • Assets under management: $32.5 billion
  • Date of creation: December 16, 1998
  • Issuer: State Street Global Advisors

XLE targets the Energy Select Sector Index, an index of US companies in the oil, gas and consumable fuels, and energy equipment and services sectors. The fund has a low expense ratio and high liquidity, with over 20 million shares traded on average per day. More than 90% of the fund’s assets are allocated to oil, gas and consumable fuels companies, with the remainder divided among energy equipment and services companies.

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As of this writing, the author does not own any of the above ETFs.

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