MLPX vs XOP: Weighing Energy Infrastructure and Upstream ETFs for Portfolio Fit

The Global X-MLP & Energy Infrastructure ETF (NYSEMKT:MLPX) targets midstream infrastructure and higher yields, while the State Street SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) provides broader exposure to upstream energy production.

Energy investors often navigate the trade-off between volatile extraction companies and steadier transport operations. These two funds represent distinct strategies within the sector: one focuses on producers pulling oil and gas from the ground, while the other targets the pipelines and infrastructure moving energy to market. This analysis breaks down differences in cost, yield, and portfolio concentration to help determine which approach may suit a specific portfolio.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500 and is calculated from monthly returns over the available fund history, up to five years. The one-year return represents total return over the trailing twelve months, and dividend yield is the trailing twelve-month distribution yield.

The State Street SPDR S&P Oil & Gas Exploration & Production ETF is the more affordable option with a 0.35% expense ratio. However, investors seeking income may find the Global X-MLP & Energy Infrastructure ETF more attractive due to its higher payout.

Performance & risk comparison

What’s inside

The Global X-MLP & Energy Infrastructure ETF focuses exclusively on the energy sector, holding 29 positions primarily in midstream infrastructure companies that transport and store commodities. This infrastructure focus often results in different price behavior compared to the more volatile extraction markets. Its largest positions include TC Energy at 8.9%, Williams Cos. at 8.86%, and Enbridge at 8.62%. The fund was launched in 2013. It has paid $3.07 per share over the trailing twelve months, which on its recent ~$75.4 share price works out to a 4.1% yield.

The State Street SPDR S&P Oil & Gas Exploration & Production ETF targets the oil and gas exploration and production segment with 51 holdings, providing broader diversification across 95% energy and 4% basic materials. By using a modified equal-weighted index, the fund ensures that mid- and small-cap companies have a meaningful impact on performance alongside industry giants. Its top holdings include PBF Energy Class A at 3.89%, HF Sinclair at 3.27%, and Delek US at 3.26%. The fund was launched in 2006. It has paid $3.25 per share over the trailing twelve months, which on its recent ~$187.5 share price works out to a 1.7% yield.

Which looks like the better buy

Choosing between the XOP and MLPX ETFs comes down to which sector of the energy market you want to invest in. XOP targets oil and gas exploration and production companies, whose success and failure are tied in many ways to commodity prices. This can generate massive upside potential, but also introduces more volatility, as seen by XOP’s more than 50% maximum drawdown over five years.

MLPX is a bet on the midstream segment of the market, where companies transport and store commodities. These companies sign long-term contracts and charge recurring fees for their services, meaning they’re better for investors seeking income generation and stability, but they may fall short on growth. That’s not to say that MLPX won’t grow — in fact, its growth over five years isn’t that different from XOP’s. But that’s on a total return basis, meaning dividends were reinvested into the stock.

If you are looking to add comprehensive energy exposure to a diversified portfolio, it may be best to hold positions in both ETFs. But if you’re only looking to add one fund, be clear about your investment goals: income and stability, or growth potential.

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