The Best Energy ETFs to Buy
Energy ETFs can help investors earn income, hedge against inflation or speculate on commodity prices. Here are five we like.


More than a century after American magnate John D. Rockefeller built a petroleum empire through Standard Oil – at its peak, the company controlled roughly 91% of U.S. oil production – its legacy still looms large in today's market.
Some of the biggest players in the energy sector today can trace their corporate roots directly to the 34 operating companies created by Standard Oil's historic breakup. The list features Exxon Mobil (XOM), Chevron (CVX), BP (BP) and Marathon Petroleum (MPC), among others.
Today, there's no reason for prospective energy investors to go piecemeal trying to put Standard Oil back together. There are many good reasons to skip the stock-picking altogether and opt for an energy ETF instead.
Why buy energy ETFs?
Energy ETFs are often viewed through a one-dimensional lens – primarily as a way to speculate on commodity prices. That makes sense at first glance, given the basic mechanics of how an integrated oil and gas company earns revenue.
Such firms extract crude oil or natural gas, process and refine it, and then sell it in various forms. When energy prices rise, it means better margins on those products, stronger earnings and, ultimately, higher stock prices. That dynamic is what draws traders and short-term investors looking to ride a price rally.
But that's just one of many ways energy ETFs can fit into your portfolio.
Another key use case is inflation hedging. During the high-inflation, rising-rate environment of 2022, when most funds struggled, energy ETFs stood out as one of the few that posted gains. That's because inflation tends to lift the input costs across the economy, including oil and gas.
Energy producers who sell those inputs can benefit from higher prices and pricing power, making them a rare winner when everything else is getting squeezed.
Finally, many of the largest energy companies have gotten incredibly lean and efficient in recent years. They've paid down debt, boosted margins and focused on capital discipline, which has led to record levels of free cash flow – essentially the money left over after paying for operations and maintenance.
With all that excess cash, they've ramped up shareholder returns through stock buybacks and, more notably, dividends. Energy giants routinely offer dividend yields that far surpass the broader market, making energy ETFs an appealing option for income-focused investors.
How we chose the best energy ETFs to buy
To narrow the field, we focused only on broad energy sector ETFs, funds that provide diversified exposure across the entire oil and gas value chain.
The energy industry is typically divided into three core segments: upstream (exploration and production), midstream (transportation and storage, including pipelines) and downstream (refining and distribution of end products like gasoline).
While there are plenty of niche ETFs targeting just one part of this chain – such as master limited partnerships (MLPs) or the companies drilling for oil and gas – we excluded those in favor of funds with broad coverage across two or more segments.
We also excluded leveraged and inverse energy ETFs, which are generally geared toward short-term trading, not long-term investing. These products reset daily, and compounding effects over time can result in returns that deviate significantly from the underlying benchmark.
Additionally, we left out commodity ETFs that trade oil, natural gas or refined fuel futures contracts. These tend to carry complex tax treatment – often issuing Schedule K-1 forms at tax time – and come with higher expense ratios and elevated volatility.
Lastly, while clean energy is undoubtedly a vital part of the global energy transition, it occupies a niche of its own. So don't expect to see any solar, wind or nuclear-focused ETFs on the list.
This roundup is specifically geared toward conventional energy ETFs that provide diversified access to the oil and gas industry in all its stages. From there, we applied our usual three-part ETF selection framework:
Fees: Investors should avoid paying more than 50 basis points (0.5%) annually for a sector ETF in 2025, especially when many solid options charge well under that threshold.
Liquidity: A good ETF should be easy to trade, with a tight 30-day median bid-ask spread that minimizes hidden transaction costs.
Reputability: We prioritized ETFs from established issuers with strong track records and sufficient assets under management (AUM) to reduce the risk of fund closure due to lack of investor interest.
With that in mind, here are five of the best energy ETFs to buy.
Data is as of August 27.

The Energy Select Sector SPDR Fund
- Assets under management: $27 billion
- Expense ratio: 0.08%, or $8 annually for every $10,000 invested
- 30-day median bid-ask spread: 0.01%
- Dividend yield: 3.2%
The Energy Select Sector SPDR Fund (XLE) draws from a narrow subset of 22 energy stocks contained in the S&P 500, so it's made up almost entirely of large-cap companies that meet the index's earnings quality screen.
Because it's market cap-weighted, the larger a company is, the more it dominates the fund; Exxon Mobil and Chevron alone account for 41.6% of the portfolio.
Still, this ETF remains a favorite thanks to its rock-bottom fees, deep liquidity and an available options chain for more advanced strategies.
Learn more about XLE at the State Street Global Advisors provider site.

Vanguard Energy ETF
- Assets under management: $8.8 billion
- Expense ratio: 0.09%
- 30-day median bid-ask spread: 0.02%
- Dividend yield: 3.1%
The Vanguard Energy ETF (VDE) is a more diversified alternative to XLE, with 114 holdings drawn from the broader MSCI US Investable Market Index (IMI)/Energy 25/50. That means it includes mid- and small-cap names in addition to the usual large-cap stocks.
The fund is still market cap-weighted though, so Exxon Mobil and Chevron dominate but to a lesser degree than in XLE.
VDE's options chain isn't as robust as XLE's, with fewer available strike prices, expiry dates and contract open interest, which makes the fund better suited as a buy-and-hold position for long-term investors.

iShares Global Energy ETF
- Assets under management: $1.8 billion
- Expense ratio: 0.4%
- 30-day median bid-ask spread: 0.03%
- Dividend yield: 3.7%
The energy sector doesn't end with the Exxon Mobil and Chevron duo. Global giants such as Shell (SHEL) and BP in the U.K., TotalEnergies (TTE) in France and Canadian Natural Resources (CNQ) and Enbridge (ENB) in Canada are all major players.
U.S.-only ETFs such as XLE and VDE miss these names entirely, making the iShares Global Energy ETF (IXC) a strong alternative for those seeking international exposure.
The fund tracks 64 companies in the S&P Global 1200 Energy 4.5/22.5/45 Capped IndexTM, offering market cap-weighted exposure to global energy leaders. Though it's about four times as expensive as its U.S.-focused peers, IXC is still liquid and delivers a higher yield, making it a worthy trade-off for access to international holdings.

Fidelity MSCI Energy Index ETF
- Assets under management: $1.4 billion
- Expense ratio: 0.08%
- 30-day median bid-ask spread: 0.04%
- Dividend yield: 3.2%
There's more than one way to structure an energy index, and the Fidelity MSCI Energy Index ETF (FENY) – VDE's closest competitor – tracks the MSCI USA IMI Energy Index. It currently holds just over 100 energy stocks in a market cap-weighted portfolio. As expected, Exxon Mobil and Chevron dominate the top spots.
While the benchmark differs from that of VDE or XLE, the overall exposure and historical performance are very similar. With nearly identical fees and trading liquidity, FENY also works well as a tax-loss harvesting partner for either VDE or XLE.

Invesco S&P 500 Equal Weight Energy ETF
- Assets under management: $422.3 million
- Expense ratio: 0.4%
- 30-day median bid-ask spread: 0.05%
- Dividend yield: 2.6%
The Invesco S&P 500 Equal Weight Energy ETF (RSPG) is one of the best energy ETFs to buy if you want to stick with U.S.-listed companies but don't want a portfolio dominated by Exxon Mobil and Chevron. It tracks the S&P 500 Equal Weight Energy Plus Index, which includes all 23 energy sector stocks in the S&P 500 and assigns each an equal weight regardless of market cap.
The higher expense ratio for RSPG may be a worthwhile trade-off for investors looking to sidestep concentration risk and gain more balanced exposure to the sector.
Learn more about RSPG at the Invesco provider site.
Related content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Tony started investing during the 2017 marijuana stock bubble. After incurring some hilarious losses on various poor stock picks, he now adheres to Bogleheads-style passive investing strategies using index ETFs. Tony graduated in 2023 from Columbia University with a Master's degree in risk management. He holds the Certified ETF Advisor (CETF®) designation from The ETF Institute. Tony's work has also appeared in U.S. News & World Report, USA Today, ETF Central, The Motley Fool, TheStreet, and Benzinga. He is the founder of ETF Portfolio Blueprint.
-
Don't Toss It! Why Your Medicare Annual Notice of Change Matters
If you have Medicare Part D or a Medicare Advantage plan, reviewing your Annual Notice of Change is crucial. It can save you money and ensure you can still see your preferred doctors and hospitals.
-
S&P 500 Hits New High After Oracle Earnings: Stock Market Today
Another down day for Apple held the Dow Jones Industrial Average back, though.
-
S&P 500 Hits New High After Oracle Earnings: Stock Market Today
Another down day for Apple held the Dow Jones Industrial Average back, though.
-
StubHub IPO: Should You Buy STUB Stock?
The highly anticipated StubHub IPO is right on our doorstep, with the online ticket marketplace expected to start trading later this month.
-
What Your Portfolio Says About You – and Your Relationship with Risk
How well do you understand yourself and your risk tolerance? Being able to answer this question will help you become a better investor.
-
Answers to Every Early Retiree's Questions This Year, From a Wealth Adviser
From how to retire in a crazy market to how much to withdraw and how to spend without feeling guilty, a financial pro shares the advice he's given this year.
-
The Risks of Forced DST-to-UPREIT Conversions, From a Real Estate Expert
Some new Delaware statutory trust offerings are forcing investors into 721 UPREIT conversions at the end of the hold period, raising concerns about loss of control, limited liquidity, opaque valuations and unexpected tax liabilities.
-
Stocks Grind Up to New All-Time Highs: Stock Market Today
UnitedHealth stock led the Dow Jones Industrial Average amid increasing signs the labor market has not been well for months.
-
The 'Nothing Ever Happens' Market: How Stocks React (Or Don't) to Geopolitical Events
Geopolitical events – terrorist acts, wars or military intervention – can give stocks a jolt. But that doesn't mean your portfolio will take a long-term hit.
-
I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps It
The Great Wealth Transfer is well underway, yet too many families aren't ready. Here's how to bridge the generation gap that could threaten your legacy.