Investors should realize while some energy ETFs share similarities, most vary greatly from each other. For example, XLE and rival cap-weighted energy ETFs focus heavily on the largest energy names, such as Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), the two largest U.S. oil companies.
Oil majors have tightened their belts, reducing costs by laying off thousands of workers and halted many new projects. Large integrated oil companies are expected to hold up better than drilling stocks as these giants have both upstream exploration and production, along with downstream refining operations.
“Over the last several years, numerous sector-focused ETFs have come to market, including several energy industry funds. Since ETFs track market indexes, it’s not surprising that most energy ETFs have done poorly over the last year,” adds CNBC.
Energy Select Sector SPDR
