Energy Select Sector SPDR Fund (NYSE: XLE) US$54.09

The XLE ETF is the largest and most liquid energy ETF in the world, with ~US$36 billion AUM, helped by a very small 0.08% management fee. The ETF holds US oil & gas stocks, with companies including ExxonMobil (23%), Chevron (16%)  and ConocoPhillips (7%) illustrating the concentrated nature of its holdings. The ETF is up +30% over the last year, very similar to the ASX-listed FUEL ETF’s +31%. Hence, we see no reason not to utilise the locally traded option.

• We like the risk/reward towards the XLE ETF in the current weakness, although we have mixed feelings on the fundamental backdrop.