Energy ETFs Returned More Than 62% Over the Past Year. These 3 Charge as Little as 0.08%

Over the past year, the State Street Energy ETF (NYSEARCA:XLE) returned 65%. The iShares U.S. Energy ETF (NYSEARCA:IYE) gained 63%, and the Vanguard Energy ETF (NYSEARCA:VDE) added 62%. Over the same stretch, the S&P 500 comparison fund, the iShares Core S&P 500 ETF (NYSEARCA:IVV), returned 12%.

Every figure includes reinvested distributions and runs through October 30, 2026. Annual fees run from 0.08% to 0.37%. Because these funds own the same corner of the market, their returns are almost the same. What separates them is how each index is built, how concentrated it is, and what it costs.

Oil Above $100 Powered Energy’s Year

West Texas Intermediate crude, the U.S. benchmark, traded near $62 a barrel a year ago, according to Federal Reserve data. It fell to $55 in mid-December, then jumped to $115 in early April. In its spring outlook, the U.S. Energy Information Administration pointed to disruptions in global crude production as the cause.

Late in October, crude was at $103, 66% higher than a year earlier. The cost of pumping a barrel barely changes when the price of crude rises, so most of the extra revenue turns into profit. Vanguard’s fact sheet shows the result: VDE’s holdings posted an earnings growth rate of 24% and traded at 17 times earnings.

Even in a winning year, the path was rough. Crude fell to $70 by July 1 before it recovered.

XLE: Lowest Fee and Deepest Liquidity, Built on Two Giants

XLE tracks the Energy Select Sector Index, which holds only the energy companies in the S&P 500. Its stated expense ratio is 0.08%, the cheapest here. Net assets came to nearly $36 billion in its June 30 holdings filing. That size brings tight bid-ask spreads and an active options market, which is why institutions use it as their default energy fund.

The catch is concentration. Exxon Mobil made up 23% of net assets and Chevron another 16%, according to the June 30 N-PORT filing. If either company has a bad quarter, the whole fund feels it. Pipeline operators, refiners, and oilfield service firms make up the rest. Pipelines earn on volume, and refiners can profit when crude costs drop, so the fund relies less on drilling alone.

XLE yields 2.2% and made 4 quarterly payments over the past year. Its five-year return of 190% leads this group.

Its four most recent distributions ranged from $0.37 to $0.39 per share.

VDE: Broader Reach Into Smaller Producers for a Similar Fee

VDE charges 0.09%, according to its prospectus filed with the SEC dated June 30, 2026. It tracks the MSCI US Investable Market Energy 25/50 Index, which covers companies across the large-, mid-, and small-cap range. Vanguard’s September fact sheet lists 111 stocks.

Small caps make up 12% of the fund and mid-caps 26%, a portion XLE leaves out entirely. Smaller producers tend to have higher costs per barrel and more debt, so their profits swing harder with crude in both directions. The 25/50 rule limits the weight any single company or group of large holdings can carry. The majors still lead, so the extra breadth trims their weight only modestly.

Returns have trailed XLE slightly, with 185% over five years and a 2.1% yield. That gap suggests the added smaller names didn’t beat the giants during this cycle. With ETF net assets near $10 billion, trading is easy for long-term holders.

IYE: Similar Exposure at a Steeper Price

IYE costs 0.37%, according to its SEC prospectus dated August 31, 2026. It tracks the Russell 1000 Energy RIC 22.5/45 Capped Index, and its caps keep the fund within IRS diversification limits. The September fact sheet lists 40 holdings.

Those holdings are just as top-heavy as XLE’s. Exxon made up 24% and Chevron 16%, with the top ten totaling 72%. You get much the same mix of companies as XLE but pay a higher fee.

Fees come out of fund income before it is paid to shareholders, which helps explain why IYE has the lowest yield here at 1.8%. Its five-year return of 172% also trails. With net assets of about $1.6 billion, its higher fee is the main tradeoff against its two cheaper peers.

How These Funds Behaved When Oil Collapsed

In 2020, demand fell sharply, and prices followed. XLE lost 33% that calendar year on an adjusted basis, while VDE and IYE each fell 34%. The broader baskets offered no extra protection.

Booms fade quickly, too. Monthly WTI averaged $115 in June 2022. IYE returned 60% that year, then lost 2% in 2023 as crude cooled.

Distributions carry the same risk. These funds pass along the dividends their holdings pay, and energy companies have cut payouts when cash flow falls. This year’s payments reflect $100 oil, and nothing ensures they will continue.

Fees Separate Three Funds With Nearly Identical Returns

All three beat IVV’s five-year return of 77% and its 1.1% yield. When returns move this closely together, cost is the main thing you control. Small fee differences add up year after year.

Matching Each Energy Fund to Your Tolerance for Concentration

On cost and liquidity, XLE leads the group. It has the lowest fee, the highest yield of the three, and the deepest liquidity, as long as you’re comfortable with Exxon and Chevron driving much of the result. VDE suits investors who want smaller producers alongside the majors for almost the same cost, while IYE offers similar exposure to XLE at a higher fee. Whichever fund fits, consider how a repeat of 2020 would affect your overall plan, and remember that a 60%-plus year tells you nothing about the next one.

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