The State Street Energy Select Sector SPDR ETF (NYSEMKT:XLE) provides low-cost, direct exposure to the energy sector, whereas the First Trust North American Energy Infrastructure Fund (NYSEMKT:EMLP) offers a more diversified play in infrastructure and utilities, albeit with higher management fees.
While both funds provide access to North American energy assets, they utilize fundamentally different strategies. XLE tracks the energy components of the S&P 500, focusing on major oil and gas producers. In contrast, EMLP targets infrastructure and utilities, including master limited partnerships and renewable energy production.
Cost and Size Comparison
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The State Street Energy Select Sector SPDR ETF is a highly cost-efficient option, featuring a low expense ratio of 0.08%. This stands in stark contrast to the 0.95% fee charged by the First Trust North American Energy Infrastructure Fund. While the cost difference of 0.87 percentage points is significant for investors, the trailing 12-month dividend yields remain comparable, with only a 0.11 percentage point gap.
Performance & Risk Comparison
Portfolio Composition
The State Street Energy Select Sector SPDR ETF maintains a concentrated focus on the energy sector, holding 21 securities. Its largest holdings include ExxonMobil (20.19%), Chevron (14.85%), and ConocoPhillips (5.93%). Launched in 1998, the fund has distributed $1.52 per share over the last 12 months, resulting in a yield of approximately 2.60% based on its recent price of ~$57.02.
The First Trust North American Energy Infrastructure Fund holds 65 securities, with a sectoral tilt consisting of 54% utilities, 28% energy, and 8% cash and other assets. Major positions include Enterprise Products Partners (NYSE:EPD) at 7.73% and Energy Transfer (NYSE:ET) at 7.59%. Since its 2012 launch, the fund has paid $1.21 per share over the trailing 12 months, representing a 2.70% yield on a recent price of ~$44.31. Notably, the fund also incorporates an ESG screening process.
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Investor Implications
Investors seeking energy exposure may find themselves with very different outcomes depending on their chosen fund. One may hold a vehicle that fluctuates heavily with oil price movements, while another may hold a fund focused on the steady income generated by pipelines and power grids, regardless of commodity volatility.
XLE serves as a direct play on oil and gas. With ExxonMobil and Chevron making up nearly a third of its holdings, XLE’s performance is closely tied to crude oil prices. While high energy demand can drive significant gains, falling commodity prices can lead to corresponding losses.
EMLP is designed for a different objective. Its actively managed approach blends energy infrastructure with a large allocation to regulated utilities, which provide stable, contract-based income. This defensive posture has helped EMLP maintain more consistent returns during volatile market periods, though it carries a significantly higher management fee.
For most long-term investors, XLE offers a simple, large-scale, and low-cost way to gain energy exposure. EMLP is better suited for those seeking defensive, income-oriented infrastructure exposure and who are willing to pay a premium for active management and utility diversification.
