Related: Biggest Energy ETF Jumps 4% Over Past Week
Potential investors interested in the oil and gas exploration and production play should also keep in mind that XOP is not like other similar plays out there as the State Street ETF is equally weighted, so the portfolio leans toward more smaller-sized companies.
“This is why what’s inside an ETF and not just its name and expense ratio are important,” Todd Rosenbluth, director of ETF and mutual fund research at CFRA, told CNBC. “XOP is equally weighted and has more small and mid-cap exposure than IEO so it will be down more in down years for the energy sector.”
XOP’s tilt toward smaller companies may also help the fund outperform if oil prices continue to rise as they are more sensitive to short-term changes.
For more information on the energy sector, visit our energy category.