Is SPDR S&P Oil & Gas Equipment & Services ETF (XES) a Strong ETF Right Now?
Designed to provide broad exposure to the Energy ETFs category of the market, the SPDR S&P Oil & Gas Equipment & Services ETF (XES) 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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $308.58 million, this makes it one of the average sized ETFs in the Energy ETFs. XES is managed by State Street Global Advisors. XES, before fees and expenses, seeks to match the performance of the S&P Oil & Gas Equipment & Services Select Industry Index.
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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for XES are 0.35%, which makes it one of the least expensive products in the space.
XES's 12-month trailing dividend yield is 0.64%.
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.
XES's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
When you look at individual holdings, Liberty Energy Inc (LBRT) accounts for about 5.05% of the fund's total assets, followed by Nov Inc (NOV) and Weatherford International Pl (WFRD).
The top 10 holdings account for about 44.93% of total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Oil & Gas Equipment & Services ETF has added about 2.57% so far, and it's up approximately 8.72% over the last 12 months (as of 03/12/2024). XES has traded between $67.10 and $99.83 in this past 52-week period.
The fund has a beta of 1.82 and standard deviation of 42.71% for the trailing three-year period, which makes XES a high risk choice in this particular space. With about 33 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Oil & Gas Equipment & Services 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.
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 $297.95 million in assets, VanEck Oil Services ETF has $2.07 billion. IEZ has an expense ratio of 0.40% and OIH charges 0.35%.
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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SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
NOV Inc. (NOV) : Free Stock Analysis Report
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
VanEck Oil Services ETF (OIH): ETF Research Reports
Liberty Energy Inc. (LBRT) : Free Stock Analysis Report
Weatherford International PLC (WFRD) : Free Stock Analysis Report
