The energy exchange-traded fund space has grown beyond simple stock exposure. Investors can now choose ETFs that own pass-through energy infrastructure or even hold corporate bonds from major companies.
Traditional energy equity ETFs own explorers and producers that find and extract oil and gas, and refiners and marketers that turn crude into usable products and sell them. These funds can be volatile because margins and profits rise and fall with commodity prices, so share prices can swing more than the market.
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“Investors often think of energy investing as a wager on the exploration for and extraction of hydrocarbons, and within that, their focus is often on equities,” says Christopher Getter, managing director, portfolio manager and emerging market strategist at Simplify Asset Management. “They depend jointly on success in actually finding whatever they are looking for and then the price of whatever they dig up.”
On the other hand, many income investors look to master limited partnership (MLP) ETFs as an alternative. MLPs operate in the midstream segment that transports, stores and processes energy.
“Midstream companies handle the transportation of petrochemicals and natural gas and rely on long-term contracts with corporate clients in the energy industry,” says Kenny Zhu, assistant vice president of energy and commodities research at Global X ETFs. “This makes them less susceptible to short-term trends like energy prices and more reliant on transport and storage volumes.”
The partnership structure of MLPs passes most income to investors, which often leads to higher yields. Holding them via an ETF also avoids the complex tax paperwork that comes with individual MLP units.
Another path is energy bond ETFs. These funds buy corporate bonds issued by oil and gas companies, swapping market risk for credit risk. This is the chance a company fails to pay interest on time or repay the bond at maturity. As a bond investor, you are compensated for this with a coupon.
“Our goal is to exploit what we see as a persistent disconnect: You get paid more to lend to energy companies, despite the fact that they have better fundamentals than companies with similar ratings in other industries,” Getter explains.
Energy corporate bond ETFs can provide exposure to this dynamic, with the added convenience of monthly distributions instead of the typical semi-annual payments from individual bonds.
Here are seven of the best energy ETFs to buy today:
| Fund | Expense ratio |
| Vanguard Energy ETF (ticker: VDE) | 0.09% |
| Energy Select Sector SPDR Fund (XLE) | 0.08% |
| Invesco S&P 500 Equal Weight Energy ETF (RSPG) | 0.40% |
| VanEck Oil Services ETF (OIH) | 0.35% |
| Global X MLP & Energy Infrastructure ETF (MLPX) | 0.45% |
| Tortoise North American Pipeline Fund (TPYP) | 0.40% |
| Simplify Kayne Anderson Energy and Infrastructure Credit ETF (KNRG) | 0.76% |
Vanguard Energy ETF (VDE)
“The main benefits of owning an energy ETF are not having to guess which company will outperform and reducing concentration risk by owning a broad basket of companies,” says Curtis Congdon, president of XML Financial Group. “Vanguard has a popular offering in VDE that provides low-cost, high-yield, diversified exposure to companies involved in the exploration and production of energy products.”
Energy investors who periodize low fees and broad diversification will find VDE attractive. This ETF is priced competitively, with a 0.09% expense ratio. It tracks the Spliced US Investable Market Energy 25/50 Index, which owns over 100 U.S.-listed small-, mid- and large-cap stocks weighted by market capitalization. VDE currently pays an above-average 3.1% 30-day SEC yield with quarterly distributions.
Energy Select Sector SPDR Fund (XLE)
“We prefer energy ETFs that are market-capitalization-weighted versus equal-weighted,” says Adam Grossman, global equity chief investment officer at RiverFront Investment Group. “We prefer this because we believe larger companies will have better access to capital and are more likely to have diversified businesses at the margin.” This view can be expressed with XLE.
XLE’s benchmark, the Energy Select Sector Index, is far narrower than VDE’s. It only owns energy stocks selected from the broader S&P 500 index, which itself has criteria for size, liquidity and earnings consistency. This gives XLE a stronger large-cap tilt versus VDE, despite their top holdings being similar overall. XLE also charges a 0.09% expense ratio and pays a 3.3% 30-day SEC yield.
Invesco S&P 500 Equal Weight Energy ETF (RSPG)
Market-cap-weighted energy ETFs like VDE and XLE come with significant concentration risk. Because larger companies receive heavier weighting, both ETFs are dominated by Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), which together make up over 40% of XLE and 38% of VDE. To reduce this imbalance, investors can consider RSPG, which rebalances each position to equal weights every quarter.
“Equal weighting can provide broader exposure to the energy sector and allow investors to better experience broad industry fundamentals,” says Nick Kalivas, head of factor and core equity ETF strategy at Invesco. “Optimism over deregulation in the energy sector may also increase the profitability of smaller companies, although the price of oil still remains a dominant factor.”
VanEck Oil Services ETF (OIH)
“Oil services companies are essential to sustaining and expanding global oil and gas production,” says Brandon Rakszawski, vice president and director of product management at VanEck. “OIH emphasizes industry leaders such as Schlumberger Ltd. (SLB), Halliburton Co. (HAL) and Baker Hughes Co. (BKR), firms that dominate global service capacity across onshore, offshore and deep-water operations.”
Investing in oil services companies is a play on rising energy production rather than oil prices themselves. These firms earn revenue from drilling and maintenance contracts, not from owning oil or gas reserves. Compared to explorers, producers or pipeline operators, they benefit when global demand drives more drilling activity and when regulations permit further exploration or well development.
Global X MLP & Energy Infrastructure ETF (MLPX)
“MLPs pay high yields at consistent intervals thanks to their partnership structure, which allows these firms to avoid corporate-level income taxes,” Zhu notes. “However, the partnership structure of MLPs necessitates that buyers of MLPs must file Schedule K-1s with their annual tax returns.” This form lists each investor’s share of partnership income, deductions and credits, which can complicate tax filing.
“MLPX handles Schedule K-1s at the fund level, negating the need for added tax filings, while offering exposure to the high yields generated by MLPs in a convenient and diversified investment vehicle,” Zhu explains. Investors gain access to 27 companies spanning both MLPs and incorporated pipeline operators. After accounting for a 0.45% expense ratio, the ETF’s 30-day SEC yield sits at 4.9%.
Tortoise North American Pipeline Fund (TPYP)
While MLPX is one of the cheapest midstream ETFs with MLP exposure, Global X is not considered a dedicated energy specialist. That distinction belongs to Tortoise Capital, a firm long known for its energy closed-end funds. In recent years, Tortoise has also built a strong ETF lineup, with its flagship midstream offering being TPYP. The ETF charges a 0.4% expense ratio and pays a 4% 30-day SEC yield.
“Record-setting U.S. natural gas exports continue to expand America’s role in global energy markets,” says Mark Marifian, head of product at Tortoise Capital. “With nearly three-quarters of the portfolio focused on natural gas pipeline operators and local distribution companies, TPYP is well positioned to benefit from increased domestic consumption and surging liquefied natural gas exports.”
Simplify Kayne Anderson Energy and Infrastructure Credit ETF (KNRG)
“KNRG’s focus is on the mission-critical activities which support energy, ranging from processing to storage to transport to transmission; literally the companies that keep the lights on,” Getter says. “Most of them have contractual revenues which are not linked to the prices of the underlying commodities, and also benefit from structural tailwinds driving U.S. power consumption.”
But unlike typical energy infrastructure ETFs, KNRG holds corporate bonds. “We take a wide mandate with respect to ratings, including investment-grade and high-yield bonds, and security types, from plain vanilla bonds to hybrid-preferreds and even convertibles,” Getter explains. For KNRG, this supports a high 6% 30-day SEC yield with monthly payouts, along with a lower correlation to equity investments.
[Read: 7 Best ETFs to Buy Now.]
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7 Best Energy ETFs to Buy Now originally appeared on usnews.com
Update 11/10/25: This story was published at an earlier date and has been updated with new information.
