We recently mentioned cautious looking flows in XLE (SPDR Energy Select, Expense Ratio 0.18%) options involving put buying, and the ETF took a bit of a hit yesterday after previously trading at a new multi-year high intraday.
The fund has seen more than $300 million vacate lately via redemption activity, but it is not alone in the Energy equity space as profit takers are clearly rushing into the picture before year-end and taking gains for the 2013 tax year.
Related ETFs OIH (Market Vectors Oil Services, Expense Ratio 0.35%) and XOP (SPDR S&P Oil & Gas Exploration & Production, Expense Ratio 0.35%) have also seen some trimming back in positions, with the two funds losing >$200 million and >$136 million recently.
We had mentioned the large cap leaning in XLE previously, with more than 38% of the overall portfolio residing across XOM (17.21% weighting), CVX (14.88%) and SLB (6.31%). All three of these names are slated to report quarterly earnings by the end of January, so there is perhaps some pre-earnings concern in this sector which is causing some to exit positions here as well.
XLE is the largest Energy equity based ETF in the marketplace, with $7.93 billion in overall assets under management currently. Other ETFs that may possibly be in focus here include VDE (Vanguard Energy Index, Expense Ratio 0.14%) and IYE (iShares U.S. Energy Sector Index, Expense Ratio 0.48%), all of which have different make ups compared to each other when it comes down to it.
XOP for example is not heavily weighted in mega-cap integrated oil companies like XOM or CVX for instance but rather has esoteric names like CRZO, NFX, and RRC among top components. In general the Energy sector has trailed the broad market S&P 500 Index in the trailing one and five year periods, and as quarterly earnings season for sector names heats up, we will continue to monitor the flows here regularly.
Energy Select Sector SPDR
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- Oil, Gas, & Consumable Fuels
- Expense Ratio