Want to pocket some of the profits of Big Oil companies like Exxon Mobil (XOM) and Chevron (CVX) for yourself? Energy exchange-traded funds (ETFs) are among the best and easiest ways to do that—and a whole lot more.
When people think of the energy sector, they typically think of companies that pull oil or gas out of the ground. And yes, those are energy companies. But there are many other types of energy stocks—firms that transport energy commodities, firms that refine oil and gas into consumer products like gasoline, even firms that work in alternative energy sources such as solar and wind.
Because of this, energy ETFs can meet numerous needs—funds owning emerging energy plays can produce high growth, while other funds may provide high dividend yields to longer-term investors, and still other funds may be a great source of gains for short-term traders leveraging big swings in commodities like oil and natural gas.
Today, I’m going to introduce you to five energy ETFs with five very different investment flavors. Should you buy all three? Almost certainly not. But it’s likely that, if you want to add energy to your portfolio, at least one of these funds will help you do that in a way that lines up with your other investment goals.
Editor’s Note: Tabular data presented in this article is up-to-date as of March 30, 2026.
Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.
Table of Contents
The Best Energy ETFs to Buy
What exactly constitutes a great energy-sector fund is going to vary from one person to the next. That’s why I’m going to try to cover a wide swath of strategies in what is a fairly modest-sized list.
Under normal circumstances, I would boot up Morningstar Investor and run a quality screen. However, in this case, I already know there are going to be certain exceptions that Morningstar’s screener can’t account for (through no fault of its own). Specifically: Morningstar doesn’t have Medalist ratings for a number of funds in the Commodity category, and it has not yet rated a fund that effectively replaces a longtime ETF standard in a prominent niche.
So this is admittedly a more subjective picks list with only one parameter: I’ve made sure that all the energy ETFs listed here have at least $100 million in assets under management (AUM), reducing the risk that any of the funds listed here might soon delist. There’s no universal AUM threshold that everyone agrees significantly reduces the risk, but $100 million is a decent baseline for funds that have been around a few years.
Without further ado, let’s check out this list of the best energy ETFs.
1. State Street Energy Select Sector SPDR ETF
- Assets under management: $43.9 billion
- Dividend yield: 2.6%
- Expense ratio: 0.80%, or 80¢ annually on a $1,000 investment
What is XLE? The State Street Energy Select Sector SPDR ETF (XLE) is the largest energy sector ETF by a country mile—it commands four times more assets than the second-largest such fund, the Vanguard Energy ETF (VDE). It’s also been around for more than a quarter of a century, going live in 1998.
This cheap, simple index fund provides extremely basic exposure to energy (primarily oil and gas) for investors who don’t want to go stock-picking in the sector.
What does XLE hold? The XLE holds all of the energy-sector stocks in the S&P 500, which at the moment is 22. But not all energy companies are in the same kind of business.
Top holdings Exxon and Chevron are called “integrated” companies, meaning they span upstream (exploration and production), midstream (transportation and storage), and downstream (refining, distributing, and retail). Some holdings are only engaged in one or two “streams”—Phillips 66 (PSX), for instance, doesn’t engage in extracting oil or gas, but it does refine, transport, store, and sell energy products. (Have you seen a Phillips 66 gas station? That’s part of their retail unit.)
What else should you know about XLE? Here’s a term every beginner investor should know: “cap-weighted.”
Cap-weighted is short for “market capitalization-weighted,” which means that the bigger the stock, the more assets a fund dedicates to that stock. Exxon, at $720 billion in market capitalization, is the largest stock XLE holds—and it also enjoys the largest “weight,” at 23% of XLE’s assets. By comparison, $15 billion APA Corp. (APA) accounts for just 0.8% of assets.
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Why does that matter? The more of a fund’s assets a stock commands, the more effect its performance has on the fund’s performance. Effectively, Exxon accounts for 23% of XLE’s performance. Chevron, by the way, accounts for another 17%, so that means just two stocks—XOM and CVX—are responsible for 40% of XLE’s returns! This is called “concentration risk,” and it’s something you need to think about whenever you own a fund—if you already own Exxon and Chevron, buying this SPDR energy ETF puts even more weight on those two stocks’ shoulders.
APA, in the meantime, accounts for less than 1%. So even a very big move from APA might not be noticeable in XLE’s performance.
That doesn’t necessarily mean that State Street Energy Select Sector SPDR ETF is bad. XLE is different than many other funds in that most of its holdings are extremely sensitive to one factor: changes in commodity prices. That means if XOM moves, chances are that ConocoPhillips (COP), EOG Resources (EOG), and all of XLE’s other holdings are moving in a similar direction. Even if the fund’s assets were more evenly distributed, it might not make all that much of a difference. So despite XLE being extremely imbalanced, it’s remains an effective way to get exposure to the energy sector.
One last note: Dividends from the energy sector are much higher than the market as a whole. XLE often yields more than 3%, but that’s “down” to the mid-2% area because of energy’s rapid gains over the past few months. And that’s still more than double the 1.1% offered up by the S&P 500.
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2. iShares U.S. Oil Equipment & Services ETF
- Assets under management: $431.4 million
- Dividend yield: 1.3%
- Expense ratio: 0.38%, or $3.80 annually on a $1,000 investment
What is IEZ? The iShares U.S. Oil Equipment & Services ETF (IEZ) is a more focused energy fund than the aforementioned XLE. Whereas the XLE is a sector-level fund that provides exposure to a variety of different energy industries, the IEZ is a “subsector”-level index fund owning equipment and services firms, with an additional bent toward oil.
This exposure is a higher-risk, higher-reward play on the price of oil than a broad-sector fund.
What does IEZ hold? The IEZ tracks the Dow Jones U.S. Select Oil Equipment & Services Index, which is made up of stocks within the Dow Jones U.S. Broad Stock Market Index that are classified in the DJICS Oil Equipment & Services subsector. iShares breaks down that subsector into two categories: oil and gas equipment and services (~85% of assets), and oil and gas drilling (~15%).
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Broadly speaking, these companies provide machinery, technology, and labor that other energy firms need to explore for, drill for, and produce crude oil and natural gas. Their offerings include drilling, directional services, seismic testing, and well maintenance, among other things.
The resulting portfolio includes 31 components, including the likes of services giants SLB (SLB) and Baker Hughes (BKR).
What else should you know about IEZ? Oil and equipment services is a relatively small slice of the energy sector, representing only about 10% to 15% of the assets in most broader energy-sector funds. In XLE, for instance, SLB, Baker Hughes, and Halliburton (HAL) are the only three services firms, accounting for roughly 4%, 3%, and 2% of assets, respectively.
But in the iShares U.S. Oil Equipment & Services ETF, they’re the top three holdings, collectively accounting for literally half of the fund’s assets as I write this. And the lion’s share of that is split between SLB and Baker Hughes at roughly 23% apiece. Thus, much like XLE investors need to worry about Exxon and Chevron, IEZ shareholders have to sweat how SLB and BKR perform.
So, why should we consider owning IEZ?
The upstream E&P businesses prevalent in XLE are perhaps the most directly tied to commodity prices. Oil services’ tether to prices is more secondary—they benefit when E&P companies increase their capital expenditures, which is likelier to happen during extended periods of higher commodity prices. In short, they’re distinct enough to behave differently and occasionally produce their own pockets of value, even during times when other energy stocks might have become too frothy.
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3. JPMorgan Alerian MLP ETN
- Assets under management: $824.3 million
- Dividend yield: 5.8%
- Expense ratio: 0.85%, or $8.50 annually on a $1,000 investment
What is AMJB? The JPMorgan Alerian MLP ETN (AMJB) is an ETF-like fund (more on that in a bit) dedicated to providing access to one small slice of the sector pie: energy master limited partnerships (MLPs).
Master limited partnerships aren’t a type of energy company—they’re an overall business structure that’s applicable to numerous industries. They’re considered “pass-through entities” because income isn’t taxed at the corporate level—it’s “passed through” to owners and “unitholders” (the MLP equivalent of shareholders) via “distributions” (the MLP equivalent of dividends). MLPs can trade publicly just like regular companies, but they also provide some special tax perks because of the nature of these distributions, which we’ll also get to in a moment.
The JPMogan Alerian MLP ETN provides exposure to a very specific subset of master limited partnerships—energy MLPs, which typically involve energy’s “midstream”: pipelines, terminals, and storage.
What does AMJB hold? Technically speaking, AMJB doesn’t hold anything … but again, we’ll get to that in a second.
AMJB tracks the Alerian MLP Index, which is made up of 17 publicly traded energy MLPs. This is an extremely tight portfolio. Top “holdings” include the likes of Enterprise Products Partners LP (EPD), Sunoco LP (SUN), and Energy Transfer LP (ET), which boast thousands of miles of pipelines, as well as storage facilities, processing plants, and other midstream energy assets.
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What else should you know about AMJB? I think AMJB is one of the best ways to invest in MLPs, but its, er, plumbing is far from straightforward.
AMJB isn’t an ETF—it’s technically an exchange-traded note (ETN). In extremely oversimplified terms, an exchange-traded note is actually a debt security bundled up in an ETF wrapper. It replicates an index’s performance, but it doesn’t actually hold anything. You’ll still enjoy returns if the companies in AMJB head higher (or losses if their prices decline), and you’ll still be paid dividends. But there is an added risk: If the company issuing the underlying debt (in this case, JPMorgan) gets into extreme financial trouble, the fund could suffer even if its underlying index performs well.
Funnily, for as complex as all that sounds, you buy and sell ETNs just like you would an ETF. Your brokerage account experience will be exactly the same.
But why take on that additional risk? Why not just own master limited partnerships outright, or own an MLP ETF?
MLPs tend to generate far-above-average (and even tax-advantaged) income, but they also generate far-above-average taxheadaches. MLP distributions are primarily made up of tax-deferred return of capital, with the remainder typically considered ordinary income. MLPs even require an additional form—the K-1—come tax time.
MLP funds like the popular Alerian MLP ETF (AMLP) cure one of those headaches by providing a 1099 instead of a K-1, but you still have to deal with the split of return of capital and ordinary income.
AMJB issues a 1099, not a K-1. And it simply distributes all of its income in the form of a quarterly coupon. That coupon is treated as ordinary income—taxed at your marginal rate, not the lower capital-gains tax rate reserved for long-term investments and qualified dividends. You also don’t get quite the same amount of yield as you would from AMLP. However, you can avoid taxation on the coupon payments by owning AMJB in a tax-deferred account like an IRA.
Why not do the same with traditional MLP ETFs? You can, but watch out. Distributions from MLPs are considered unrelated business taxable income (UBTI), and a tax-deferred account is allowed a deduction of up to $1,000 in UBTI. Above that threshold, the income is taxable as ordinary income. AMJB’s distributions, while linked to the distributions paid by the Alerian MLP Index’s constituents, are technically coupon payments and not subject to UBTI rules.
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4. Invesco DB Oil Fund
- Assets under management: $391.5 million
- Dividend yield: 2.1%
- Expense ratio: 0.81%, or $8.10 annually on a $1,000 investment
What is DBO? The Invesco DB Oil Fund (DBO) is a commodity fund that allows investors to track the price of West Texas Intermediate (WTI) light, sweet crude oil via futures contracts.
What does DBO hold? This Invesco fund tracks the DBIQ Optimum Yield Crude Oil Index Excess Return index, which will generally hold a single month’s WTI oil contract. For instance, right now, it holds NYMEX Light Sweet Crude Oil Futures expiring in August 2026.
It also will hold Treasury securities (usually through a fund), as well as money market funds, which will produce income that the ETF distributes on an annual basis.
What else should you know about DBO? In each of the previous funds, you’re generally trying to reap the benefits of rising oil, gas, and other energy commodity prices by owning equities tied to those commodities. DBO is more direct—performance is tied to oil futures contracts with no corporate middleman.
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That said, futures are hardly perfect. While spot prices factor heavily into futures prices, they’re not the only variable—they also consider “cost of carry” (storage, insurance, financing), which among other things means that interest rates are also involved.
One big risk you have to consider in futures funds is contango, when futures prices are higher than the current spot price. In the case of some commodity funds, they’ll hold only the front-month futures contract, then sell that right before it expires to purchase the next month’s futures contract. And there’s a risk that the fund will sell that front-month contract for less than what it will pay to purchase the next month’s contract.
DBO is built to defray this risk somewhat. Rather than automatically roll over its expiring contracts into next-month contracts, it can roll its contracts over into any futures contract within the next 13 months. This allows DBO to benefit from another futures condition, “backwardation,” in which you sell more expensive expiring contracts to purchase less expensive futures (basically the opposite of contango).
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5. State Street SPDR S&P Kensho Clean Power ETF
- Assets under management: $191.9 million
- Dividend yield: 1.4%
- Expense ratio: 0.45%, or $4.50 annually on a $1,000 investment
What is CNRG? Some investors want more than old, dirty energy—they want new, cleaner energy. And that’s what the State Street SPDR S&P Kensho Clean Power ETF (CNRG) is designed to provide. The clean energy types CNRG targets includes solar, wind, hydroelectric, and geothermal.
CNRG does this by tracking the S&P Kensho Clean Power Index, which itself holds components from two Kensho indexes—the S&P Kensho Cleantech Index and the S&P Kensho Clean Energy Index.
What does CNRG hold? By tracking two indexes, CNRG provides two somewhat different types of clean-energy exposure with in the same fund. The S&P Kensho Cleantech Index is made up of companies that “offer products and services related to manufacturing the technology for renewable energy,” while the S&P Kensho Clean Energy Index is made up of companies that “offer products and services related to renewable energy.”
They sound really similar, but they’re not at all the same.
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The “Cleantech” holdings include companies like Bloom Energy (BE) and GE Vernova (GE) that provide technology in and around clean energy—Bloom Energy, for instance, produces fuel cells that produce electricity onsite in places like data centers and factories, while GE Vernova produces, among other things, wind turbines for wind energy and aerating turbines for hydroelectric energy.
The “Clean Energy” holdings, for the most part, actually produce the clean energy. For instance, holding NextEra Energy (NEE), through its NextEra Energy Resources subsidiary, is the world’s largest generator of renewable energy from wind and solar.
All told, CNRG currently holds 43 stocks. The SPDR S&P Kensho Clean Power ETF uses a quantitative weighting methodology that ensures the biggest companies don’t dictate the fund’s performance. CNRG’s top holding, SolarEdge Technologies (SEDG), accounts for 4.7% of assets; no other component accounts for more than 4% right now.
Also, because of the fund’s split focus between higher-yielding sectors such as utilities and energy, and “growthier” sectors like technology and industrials, CNRG offers some growth potential and some income potential—but not necessarily a high amount of either.
What else should you know about CNRG? Why invest in the companies that the Kensho Clean Power ETF holds when rising oil or natural gas prices wouldn’t put another dime in their pockets?
Because rising and/or sky-high energy prices, as well as fears about the stability of energy supply (say, I don’t know, the Strait of Hormuz), might very well propel increased interest in alternative energy sources like solar, wind, nuclear, and more. And that helps to put coin in CNRG’s holdings’ coffers.
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As even novice investors probably know, funds—whether they’re mutual funds or exchange-traded funds (ETFs)—are the simplest and easiest ways to invest in the stock market. But the best long-term stocks also offer many investors a way to stay “invested” intellectually—by following companies they believe in. They also provide investors with the potential for outperformance.
So if you’re looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.
Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income
The vast majority of American dividend stocks pay regular, reliable payouts—and they do so at a more frequent clip (quarterly) than dividend stocks in most other countries (typically every six months or year).
Still, if you’ve ever thought to yourself, “it’d sure be nice to collect these dividends more often,” you don’t have to look far. While they’re not terribly common, American exchanges boast dozens of monthly dividend stocks.
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