Leading Oil and Gas ETFs to Watch in 2025

Among the premier oil and gas ETFs, PXE, IEO, and XLE stand out as top choices for investors seeking exposure to the energy sector.

Following a decline from summer peaks, oil and gas prices have rebounded, prompting investors to consider leading ETFs that focus on oil and gas companies. These funds have seen gains of up to 73% over the past year.

The Invesco Dynamic Energy Exploration & Production ETF, iShares U.S. Oil & Gas Exploration & Production ETF, and Energy Select Sector SPDR Fund invest primarily in oil and gas equities instead of the raw commodities or futures contracts.

Key Highlights

• The energy sector outpaced the broader market significantly over the last year, driven by geopolitical tensions, inflation, and supply-demand dynamics.
• Three standout energy ETFs outperformed the general market within this period.
• These ETFs include Invesco Dynamic Energy Exploration & Production ETF, iShares U.S. Oil & Gas Exploration & Production ETF, and Energy Select Sector SPDR Fund.
• ConocoPhillips is the largest holding in the first two ETFs, while Exxon Mobil Corp. leads the third.

Within the U.S. market, 30 oil and gas stock ETFs are actively traded, excluding leveraged, inverse ETFs, and those with assets under $50 million. The S&P 500 Energy sector index has delivered a remarkable 69.8% total return over the past year, vastly outperforming the S&P 500 Index’s -14.4%, as of November 18, 2022. Below is a detailed look at the top three oil and gas ETFs, with data current as of November 17, 2022.

Invesco Dynamic Energy Exploration & Production ETF (PXE)

• One-Year Performance: 73.2%
• Expense Ratio: 0.63%
• Annual Dividend Yield: 1.69%
• Average Daily Volume (3 months): 165,823 shares
• Assets Under Management: $352.1 million
• Inception Date: October 26, 2005
• Issuer: Invesco

PXE aims to replicate the Dynamic Energy Exploration & Production Intellidex Index, comprising 30 U.S.-based companies engaged in the exploration and production of energy resources. Selection criteria include price and earnings momentum, quality, management effectiveness, and value metrics. The fund invests predominantly in companies involved in crude oil and natural gas exploration, extraction, and production, including petroleum refineries and natural gas processing firms. PXE employs a balanced approach, blending growth and value stocks across various market capitalizations.

The ETF's top three holdings are ConocoPhillips (COP), Diamondback Energy Inc. (FANG), and Marathon Petroleum Corp. (MPC). While the first two focus on upstream oil and gas activities, Marathon Petroleum specializes in refining, marketing, and transportation.

iShares U.S. Oil & Gas Exploration & Production ETF (IEO)

• One-Year Performance: 70.9%
• Expense Ratio: 0.39%
• Annual Dividend Yield: 1.96%
• Average Daily Volume (3 months): 235,429 shares
• Assets Under Management: $1.3 billion
• Inception Date: May 1, 2006
• Issuer: BlackRock Financial Management

IEO tracks the Dow Jones U.S. Select Oil Exploration & Production Index, focusing on U.S. equities involved in oil and gas exploration and production. This market-cap-weighted ETF offers predominant exposure to exploration and production companies, which constitute roughly 75% of its holdings. It also includes firms engaged in refining, marketing, transportation, and storage of oil and gas. The fund maintains a diversified mix of growth and value stocks spanning various market caps.

Its leading holdings include ConocoPhillips, EOG Resources Inc. (EOG), a prominent exploration and production company, and Pioneer Natural Resources Co. (PXD), specializing in hydrocarbon exploration.

Energy Select Sector SPDR Fund (XLE)

• One-Year Performance: 68.7%
• Expense Ratio: 0.10%
• Annual Dividend Yield: 3.75%
• Average Daily Volume (3 months): 26,499,240 shares
• Assets Under Management: $44.0 billion
• Inception Date: December 16, 1998
• Issuer: State Street

XLE targets the Energy Select Sector Index, which includes U.S. companies in oil, gas, consumable fuels, and energy equipment and services industries. This ETF is characterized by low fees and high liquidity. Over 90% of its assets are invested in oil, gas, and consumable fuel companies, with the remainder allocated to energy equipment and service providers.

Nearly 50% of XLE’s portfolio is concentrated in Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), and Schlumberger Ltd. (SLB). Exxon Mobil and Chevron are major players in oil and gas exploration and production, while Schlumberger specializes in oilfield services.

Disclaimer: The information shared here is for educational purposes only and does not constitute personalized investment advice. Market conditions can rapidly change, and past performance is not indicative of future results. Investors should conduct their own research or consult a financial advisor before making investment decisions.

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