8 Best Energy ETFs to Buy

Oil and gas stocks might not repeat 2022's gains in 2023, but these energy ETFs can still harness a stiff tailwind.

oil pumps working under sunrise sky
(Image credit: Getty Images)

Energy stocks and exchange-traded funds (ETFs) were a popular bet in 2022. The sector was far and away the best performer, with the Energy Select Sector SPDR Fund (XLE) delivering a massive total return (price plus dividends) of 64.2%, driving numerous attached energy ETFs higher. Compare that to a negative total return for the S&P 500 and nine of its sectors, and low-single-digit gains for the remaining one, and it's not even close.

The previous year will be (hopefully) almost impossible to replicate. Russia's war with Ukraine, higher travel demand and other drivers sent U.S. crude oil prices from around $75 at the start of 2022 to multiple peaks above $120 across the year.

Still, certain sparks – including China's reopening, continued conflict in Ukraine and more recently, news that Saudi Arabia and Russia will extend production cuts through year's end – could sustain a floor under oil prices.

Carrie King, global deputy chief investment officer at BlackRock Fundamental Equities, says among cyclical sectors, her firm favors energy (and financials) in 2023: "We see energy sector earnings easing from historically elevated levels yet holding up amid tight energy supply," she says.

While the odds are against energy repeating as the S&P leader this year, there is reason to believe energy funds still have more gas in the tank. So if you want to add exposure to the sector, here are our eight best energy ETFs to buy now.

Disclaimer

Data is as of Sept. 6. Yields represent the trailing 12-month yield, which is a standard measure for equity funds. 

Kyle Woodley

Kyle Woodley is the Editor-in-Chief of Young and The Invested, a site dedicated to improving the personal finances and financial literacy of parents and children. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.


Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism. 


You can check out his thoughts on the markets (and more) at @KyleWoodley.