The three most common exchange-traded funds (ETFs), that track the oil and gas drilling sector are the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund (IEO), and the PowerShares Dynamic Energy Exploration & Production Portfolio (PXE).
The SPDR S&P Oil & Gas Exploration & Production ETF
XOP was created on June 19, 2006, and has an expense ratio of 0.35% as of September 7, 2018. The ETF's 10-, five- and one-year returns were -1.46%, -7.93% and 30.89%, respectively, as of September 7, 2018. The ETF has assets of $3.19 billion. Its benchmark is the S&P Oil & Gas Exploration & Production Select Industry Index. The top holdings of the fund and their percentage of total assets are:
- SM Energy Company, 2.29%
- Matador Resources Company, 2.26%
- Energen Corporation, 2.18%
- Centennial Resource Development, 2.10%
- Andeavor, 1.99%
The iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund
IEO was founded on May 1, 2006, and has a management expense ratio of 0.43% as of September 7, 2018. Over the past 10 years, five years, and one year, respectively, the ETF has returned 2.25%, 0.32% and 34.95%. IEO's benchmark is the Dow Jones U.S. Select Oil Exploration & Production Index. The top holdings and their sizes proportionate to the fund are as follows:
- ConocoPhillips, 11.49%
- EOG Resources Inc, 9.27%
- Valero, 6.95%
- Phillips 66, 6.86%
- Marathon, 5.46%
IEO is smaller than XOP, with assets of $503.6 million.
The PowerShares Dynamic Energy Exploration & Production Portfolio
The smallest of the three most commonly traded ETFs in the oil and gas drilling sector is the PXE, with assets of $109.79 million as of September 7, 2018. It was founded on Oct. 26, 2005, and has an expense ratio of 0.65%. The ETF has returned 2.83%, -0.32% and 34.95% over the past 10-, five- and one-year time frames.
This ETF is more volatile than a broad-based index such as the S&P 500, which has ETFs like SPY tracking it. The benchmark for PXE is the Index Dynamic Energy Exploration & Production Intellidex Index. Its top holdings are:
- ConocoPhillips, 5.20%
- Marathon Petroleum, 5.18%
- Devon Energy 4.88%
- Phillips 66, 4.85%
- EOG Resources, 4.79%
Expectations for future growth of these ETFs must be tempered with an appreciation of the impact of the fluctuating price of oil and the resistance level of the commodity.
(For related reading, see "Top 3 Oil ETFs for 2018.")