Should You Invest in the SPDR S&P Oil & Gas Equipment & Services ETF (XES)?

Looking for broad exposure to the Energy – Equipment and services segment of the equity market? You should consider the SPDR S&P Oil & Gas Equipment & Services ETF (XES), a passively managed exchange traded fund launched on 06/19/2006.

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Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy – Equipment and services is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $323.55 million, making it one of the average sized ETFs attempting to match the performance of the Energy – Equipment and services segment of the equity market. XES seeks to match the performance of the S&P Oil & Gas Equipment & Services Select Industry Index before fees and expenses.

The S&P Oil & Gas Equipment & Services Select Industry Index represents the oil and gas equipment and services 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 Equipment Index is a modified equal weight index.

Costs

When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.33%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector–about 100% of the portfolio.

Looking at individual holdings, Technipfmc Plc (FTI) accounts for about 5.71% of total assets, followed by U.s. Silica Holdings Inc. (SLCA) and Championx Corporation (CHX).

The top 10 holdings account for about 48.05% of total assets under management.

Performance and Risk

The ETF has added roughly 43.70% and was up about 29.42% so far this year and in the past one year (as of 10/31/2022), respectively. XES has traded between $46.75 and $82.43 during this last 52-week period.

The ETF has a beta of 1.98 and standard deviation of 61.81% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.

Alternatives

SPDR S&P Oil & Gas Equipment & Services ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XES is a great 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 U.S. Oil Equipment & Services ETF (IEZ) tracks Dow Jones U.S. Select Oil Equipment & Services Index and the VanEck Oil Services ETF (OIH) tracks MVIS U.S. Listed Oil Services 25 Index. IShares U.S. Oil Equipment & Services ETF has $204 million in assets, VanEck Oil Services ETF has $2.83 billion. IEZ has an expense ratio of 0.39% and OIH charges 0.35%.

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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