4 Best Performing Energy ETFs

Investing in the Energy Sector

The energy sector is one of 12 stock market sectors, and is comprised of companies involved in the exploration, production, refining, and sale of energy resources, including oil and natural gas, as well as companies that service these industries. The energy sector includes some of the largest energy companies in the world, such as Exxon Mobil (XOM), Chevron (CVX).

Other than investing in individual stocks within the energy sector, ETFs can be a convenient means for investors to gain low-cost, diversified access to the energy sector. As of this writing there are 55 energy ETFs traded in U.S. markets. One large and popular energy ETF, as measured by assets under management, is the Energy Select Sector SPDR (XLE), with $37 billion in assets.

2022 Outlook on Energy ETFs

The outlook on the energy ETFs for 2022 is mixed. The energy sector, as a whole, has outperformed the broader market indices, such as the S&P 500 index, since the 2020 Covid-19 crisis and through the Russian invasion of Ukraine. However, slowing economic growth in China, and the potential for decreasing demand for oil globally, could mean that energy’s outperformance may not continue through 2022.

Note: A growing energy sub-sector is clean energy, which provide investors with exposure to companies that produce energy from wind, solar, and other renewable resources. Some investors choose clean energy ETFs as an alternative to other energy sector ETFs or they may choose clean energy as part of an ESG investing approach.

How to Evaluate Energy ETFs

Our list of best energy ETFs are ranked in order of the trailing 1-year return, as of March 31, 2022. When researching energy ETFs, investors are wise to consider more than short-term performance and to research long-term returns, as well as expense ratio, holdings, and ratings.

Criteria used to evaluate the best energy ETFs include:

• Performance: 1-year return is the primary selection criteria for evaluating the performance of our list of best energy ETFs. Thus, ETFs that were introduced to the market less than one year ago were ignored. When enough performance history is available, investors are wise to review longer return periods, such as 3-, 5-, and 10-year returns.
• Expenses: A fund’s expense ratio, which is the cost of holding an ETF, is an important criterion to review. This is because ETFs in the same sector or category often track the same or a similar index, which means that the one with the lowest expense ratio may have potential for outperforming those with higher expenses.
• Structure: Most ETFs are structured as open-ended investment companies, as opposed to closed-end funds, or CEFs. An ETF structure may also be a grantor trust or a limited partnership.
• Objective: Only ETFs that primarily hold energy stocks were considered for our list. The search for the best energy ETFs was open to actively or passively managed equity-based funds, as well as those that invest in energy futures or related commodities. However, alternative objectives and strategies, such as inverse ETFs and leveraged ETFs, were ignored for this list.
• Portfolio holdings: Energy ETFs typically hold stocks of companies in the U.S. and around the globe that are in the energy sector, including businesses involved in the exploration, production, refining, and sale of energy resources, including oil and natural gas. Some energy ETFs invest in energy futures or energy-related commodities, such as light sweet crude oil.
• Quant Ratings and Factor Grades: Seeking Alpha’s Quant Ratings and Factor Grades can be used for evaluating stocks or ETFs. In this article, we share what are called, “Factor Grades,” which provide letter grades for five “factors” – Momentum, Expenses, Dividends, Risk, and Asset Flows. To do this, Seeking Alpha compares the relevant metrics for the factor to the same metrics for the other ETFs in its asset class. The factor grades range from a high of A+ to a low of F.

4 Best Performing Energy ETFs

Top Performing Energy Funds	1-Yr Return
Invesco DB Energy Fund (DBE)	76.92%
Invesco DWA Energy Momentum ETF (PXI)	73.91%
Invesco S&P 500 Equal Weight Energy ETF (RYE)	71.73%
John Hancock Multifactor Energy ETF (JHME)	69.90%

To make our list of best energy ETFs, we rank top performance for 1-year returns, through March 31, 2022. Investors should keep in mind that past performance is no guarantee of future results and that the energy sector can see strong short-term performance while still lagging the broader stock market indices in the long term.

Note: For consistency of comparison, and for ease of reference, all energy ETFs featured here are compared to the same index, the Morningstar US Energy Index, which is a market cap weighted, free-float adjusted index consisting of 55 US energy equities. For additional reference, we include performance of the S&P 500 index.

1. Invesco DB Energy Fund (DBE)

Invesco DB Energy Fund is an exchange-traded fund that seeks to track performance of the DBIQ Optimum Yield Energy Index, which is composed of futures contracts on light sweet crude oil, heating oil, Brent crude oil, RBOB gasoline and natural gas.

• As of date: March 31, 2022
• 1-year Performance: 76.92%
• Expense Ratio: 0.75%, or $75 annually for every $10,000 invested
• 30-Day SEC Yield: None
• Average Daily Volume: 158K

Invesco DB Energy Fund Performance

	1-Yr Return	3-Yr Return	5-Yr Return	10-Yr Return
Invesco DB Energy Fund	76.92%	16.93%	13.67%	-2.26%
Morningstar US Energy Index	65.02%	11.36%	6.43%	3.83%
S&P 500 Index	15.65%	18.92%	15.99%	14.64%

The Invesco DB Energy Fund significantly outperformed the Morningstar US Energy Index for the 1-, 3- and 5-year performance, but falls far behind in the 10-year performance, which is not uncommon for funds like DBE that invest in futures. Compared to the S&P 500, DBE outperformed in the 1-year return but underperformed in all other periods through March 31, 2022. This performance history is generally consistent for most funds in the energy sector.

A $10,000 investment in the DBE ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of March 31, 2022):

• 1 year ago: $17,692
• 3 years ago: $15,987
• 5 years ago: $18,977
• 10 years ago: $7,957

Invesco DB Energy Fund Structure, Objective, and Holdings

• Inception Date: 01/05/2007
• Sponsor: Invesco Capital Management, LLC
• Ticker: DBE
• Primary Exchange: NYSE Arca
• Structure: Partnership
• Objective: Seeks to track performance of the DBIQ Optimum Yield Energy Index, which is composed of futures contracts.
• Holdings: Futures contracts

DBE ETF Seeking Alpha Quant Ratings

Momentum	Expenses	Dividends	Risk	Asset Flows
A+	C-	F	C-	A

2. Invesco DWA Momentum Energy ETF (PXI)

Invesco DWA Momentum Energy ETF is an exchange-traded fund based on the Dorsey Wright Energy Technical Leaders Index. PXI will normally invest at least 90% of its total assets in the securities that comprise the index, which is comprised of at least 30 companies in the Nasdaq index that are showing relative strength (momentum).

• As of date: March 31, 2022
• 1-year Performance: 73.91%
• Expense Ratio: 0.60%, or $60 annually for every $10,000 invested
• 30-Day SEC Yield: 0.79%
• Average Daily Volume: 136K

Invesco DWA Momentum Energy ETF Performance

	1-Yr Return	3-Yr Return	5-Yr Return	10-Yr Return
Invesco DWA Momentum Energy ETF	73.91%	11.97%	3.31%	1.80%
Morningstar US Energy Index	65.02%	11.36%	6.43%	3.83%
S&P 500 Index	15.65%	18.92%	15.99%	14.64%

The Invesco DWA Momentum Energy ETF outperforms the Morningstar US Energy Index for the 1- and 3-year performance, but lags the broad US energy index in the 5- and 10-year returns. Compared to the S&P 500, PXI outperformed in the 1-year return but underperformed in all other periods through March 31, 2022. This short-term outperformance and long-term underperformance compared to the overall market is typical of energy sector ETFs.

A $10,000 investment in the PXI ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of March 31, 2022):

• 1 year ago: $17,391
• 3 years ago: $14,038
• 5 years ago: $11,768
• 10 years ago: $ 11,953

Invesco DWA Momentum Energy ETF Structure, Objective, and Holdings

• Inception Date: 10/12/2006
• Sponsor: Invesco Capital Management, LLC
• Ticker: PXI
• Primary Exchange: Nasdaq
• Structure: Open Ended Investment Company
• Objective: Seeks to track performance of the Dorsey Wright Energy Technical Leaders Index.
• Holdings: 30 energy stocks that are showing relative performance strength (momentum).

PXI ETF Top 10 Holdings, as of March 31, 2022

Holding (Ticker)	Weight%
Cheniere Energy Inc (LNG)	4.10
Range Resources Corp (RRC)	4.03
Matador Resources Co (MTDR)	3.98
Antero Resources Corp (AR)	3.85
Ovintiv Inc (OVV)	3.76
Targa Resources Corp (TRGP)	3.76
SM Energy Co (SM)	3.76
PDC Energy Inc (PDCE)	3.66
Devon Energy Corp (DVN)	3.21
APA Corp (APA)	3.08

PXI ETF Seeking Alpha Quant Ratings

Momentum	Expenses	Dividends	Risk	Asset Flows
A+	D+	C-	F	A+

3. Invesco S&P 500 Equal Weight Energy ETF (RYE)

Invesco S&P 500 Equal Weight Energy ETF is an exchange-traded fund that is based on the S&P 500 Equal Weight Energy Plus Index, which equally weights stocks in the energy sector of the S&P 500 Index. The energy sector includes companies engaged in the exploration and production, refining and marketing, and storage and transportation of oil and gas and coal and consumable fuels.

• As of date: March 31, 2022
• 1-year Performance: 71.74%
• Expense Ratio: 0.40%, or $40 annually for every $10,000 invested
• 30-Day SEC Yield: 2.36%
• Average Daily Volume: 235K

Invesco S&P 500 Equal Weight Energy ETF Performance

	1-Yr Return	3-Yr Return	5-Yr Return	10-Yr Return
Invesco S&P 500 Equal Weight Energy ETF	71.74%	13.28%	5.42%	2.65%
Morningstar US Energy Index	65.02%	11.36%	6.43%	3.83%
S&P 500 Index	15.65%	18.92%	15.99%	14.64%

The Invesco S&P 500 Equal Weight Energy ETF outperforms the Morningstar US Energy Index for the 1- and 3-year performance, but falls slightly behind the broad US energy index in the 5- and 10-year returns. Compared to the S&P 500, RYE outperformed in the 1-year return but underperformed in the longer periods through March 31, 2022.

A $10,000 investment in the RYE ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of March 31, 2022):

• 1 year ago: $17,174
• 3 years ago: $14,537
• 5 years ago: $13,020
• 10 years ago: $12,989

Invesco S&P 500 Equal Weight Energy ETF Structure, Objective, and Holdings

• Inception Date: 11/01/2006
• Sponsor: Invesco Capital Management, LLC
• Ticker: RYE
• Primary Exchange: NYSE Arca
• Structure: Open Ended Investment Company
• Objective: Seeks to track performance of the S&P 500 Equal Weight Energy Plus Index.
• Holdings: 24 energy sector stocks from the S&P 500 index.

RYE ETF Top 10 Holdings, as of March 31, 2022

Holding (Ticker)	Weight %
Hess Corp (HES)	5.09
Marathon Oil Corp (MRO)	4.85
Targa Resources Corp (TRGP)	4.80
Coterra Energy Inc (CTRA)	4.73
Valero Energy Corp (VLO)	4.70
Marathon Petroleum Corp (MPC)	4.67
Williams Cos Inc (WMB)	4.66
Pioneer Natural Resources Co (PXD)	4.64
APA Corp (APA)	4.62
EOG Resources Inc (EOG)	4.60

RYE ETF Seeking Alpha Quant Ratings

Momentum	Expenses	Dividends	Risk	Asset Flows
A+	A	A-	D-	A+

4. John Hancock Multifactor Energy ETF (JHME)

John Hancock Multifactor Energy ETF is an exchange-traded fund that seeks to track performance of the John Hancock Dimensional Energy Index, which invests in stocks of companies operating across energy sectors and diversified market capitalization.

• As of date: March 31, 2022
• 1-year Performance: 69.90%
• Expense Ratio: 0.40%, or $40 annually for every $10,000 invested
• 30-Day SEC Yield: None
• Average Daily Volume: 9.2K

John Hancock Multifactor Energy ETF Performance

	1-Yr Return	3-Yr Return	5-Yr Return	10-Yr Return
John Hancock Multifactor Energy ETF	69.90%	9.75%	5.02%	NA
Morningstar US Energy Index	65.02%	11.36%	6.43%	3.83%
S&P 500 Index	15.65%	18.92%	15.99%	14.64%

The John Hancock Multifactor Energy ETF outperformed the Morningstar US Energy Index and the S&P 500 for the 1-year return, but underperforms both indices in the 3- and 5-year returns, as of March 31, 2022. JHME does not have a 10-year track record, as the fund was opened to investors in 2016.

A $10,000 investment in the JHME ETF, made 1 year, 3 years, and 5 years ago, would be worth (as of March 31, 2022):

• 1 year ago: $16,990
• 3 years ago: $13,219
• 5 years ago: $12,775

John Hanckock Multifactor Energy ETF Structure, Objective, and Holdings

• Inception Date: 03/28/2016
• Sponsor: John Hancock Investment Management, LLC
• Ticker: JHME
• Primary Exchange: NYSE Arca
• Structure: Open Ended Investment Company
• Objective: Seeks to track performance of the John Hancock Dimensional Energy Index.
• Holdings: 36 energy sector stocks

JHME ETF Top 10 Holdings, as of March 31, 2022

Holding (Ticker)	Weight %
Chevron Corp (CVX)	6.19
Occidental Petroleum Corp (OXY)	5.94
Exxon Mobil Corp (XOM)	5.75
ConocoPhillips (COP)	5.56
Valero Energy Corp (VLO)	5.30
Williams Cos, Inc (WMB)	4.40
EOG Resources (EOG)	4.29
Devon Energy Corp (DVN)	4.13
Hess Corp (HES)	3.92
Marathon Oil Corp (MRO)	3.88

JHME ETF Seeking Alpha Quant Ratings

Momentum	Expenses	Dividends	Risk	Asset Flows
A+	B	B-	D-	A

Bottom Line

Energy ETFs can provide investors with diversified exposure to stocks of companies in the energy sector, including those involved in the exploration, production, refining, and sale of energy resources, such as oil and natural gas. The energy sector has outperformed the S&P 500 over the past year but long-term performance lags this broad market index.