XLE Was Up, but USO Was the Winner in the Week Ended August 28


Sep. 3 2015, Published 4:53 p.m. ET

The Energy Select Sector SPDR ETF

The Energy Select Sector SPDR ETF (XLE) gained 3.54% in the week ended August 28. This ETF tracks a diverse group of ~45 of the largest American energy stocks that constitute the S&P 500 Index (SPX).

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Comparing performances

In comparison, the broad market SPDR S&P 500 ETF (SPY) gained just 0.73%. The United States Oil Fund (USO) was the biggest gainer in the week ended August 28. It gained 12.47%. The United States Natural Gas Fund (UNG) increased the least, by 0.63%. USO and UNG track movements in prompt WTI crude oil and Henry Hub natural gas futures prices, respectively. The spike in USO was thanks to the spike in crude oil prices, which increased 11.79% between August 21 and August 28. On the other hand, natural gas prices increased just 1.45% in the same period.

Apart from upstream energy companies, higher crude oil prices also benefit MLPs such as MarkWest Energy Partners (MWE).

About XLE

XLE has exposure to many types of energy companies with different exposures to energy prices. For example, XLE holds:

  • upstream oil and gas companies like ConocoPhillips (COP)
  • midstream energy companies like Kinder Morgan (KMI)
  • downstream or refining companies like Valero Energy (VLO)
  • oilfield equipment and services companies like Schlumberger (SLB)
  • integrated energy companies like Chevron (CVX)

XLE offers safer, low cost, and diversified exposure to energy prices. However, investors should also note that XLE is a market-weighted index ETF. Its top five securities constitute 44.2% of its weight, with Exxon Mobil (XOM) and CVX alone constituting 28%.

In the week ended August 28, XLE’s biggest gainers were Cameron International Corporation (CAM), which gained 51.76% between August 21 and August 28, followed by CONSOL Energy (CNX), which gained ~21%, and Chesapeake Energy (CHK), which gained ~14% in the same period. All the companies above constitute ~2% of XLE.


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