Risks with exploration and production have not stopped investors from allocating new capital to XOP, though year-to-date inflows of $569 million are arguably deceiving. XOP is often a haven for short sellers as there have been instances over the ETF’s almost nine years of trading where short interest has eclipsed 100% of the fund’s shares outstanding. When traders short an ETF, new shares are created, giving the impression the ETF is increasing in size, but when traders cover those positions, the shares are redeemed and the ETF loses mass if long traders do not initiate new positions. [An ETF Loaded With Short Seller Faves]
Some investors continue looking for shelter from the oil storm with more traditional energy ETFs, such as XLE. Lure by sector valuations that are among the lowest in the S&P 500 and the steady dividends of XLE’s two largest holdings, Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), investors have poured $267.4 million into XLE since the start of this year. That is after XLE added $5 billion in new assets last year, a total surpassed by just nine other ETFs. [Waiting on Energy Sector ETF Bounce]
Energy Select Sector SPDR
ETF Trends editorial team contributed to this post.