Energy ETFs provide diverse investment opportunities, particularly to investors interested in the energy market. These ETFs seem positioned for continued growth as industry leaders consistently invest in production efficiency, enhance capacity, and adopt the latest technologies.

Given the backdrop, let’s look at the best-performing energy equities ETFs like Fidelity MSCI Energy Index ETF (FENY), Dimensional Emerging Core Equity Market ETF (DFAE), and Vanguard Energy Index Fund ETF Shares (VDE) to supercharge your portfolio this year.

In a recent session, oil prices settled up by more than $1 a barrel as optimism on China’s economy rose and fueled demand after a pledge by President Xi Jinping to promote growth, Reuters reported. Brent crude futures reached $75.93 a barrel, up $1.29, or 1.7%, and U.S. West Texas Intermediate crude totaled $73.13 a barrel, up $1.41, or 2%.

In 2024, the crude oil and natural gas market was navigated by a complex landscape of restrained OPEC+ supply and variable demand, surging geopolitical tensions, macroeconomic weakness, and emphasis on energy transition. This resilience was reflected in the stability of oil prices. US crude oil production rose 2% year-over-year to 13.2 MMbbl/d, and Brent crude oil averaged $81 bbl in 2024.

Further, companies are increasingly focusing on production efficiency and prioritizing high-return investments. This resulted in the industry’s net profit rising by nearly 16% over the last four years. Also, an upsurge in investments in low-carbon technology projects and advanced digital technology will drive the future energy landscape.

With the rapidly transitioning and growing energy market globally, energy ETFs stand to capitalize and benefit from the dynamics and offer long-term capital appreciation to investors. These ETFs invest in a broad spectrum of companies, covering many sub-industries within the energy market. Also, ETFs provide promising opportunities for diversification and growth.

Given these encouraging trends, let’s look at the fundamentals of the top three Energy Equities ETFs, beginning with number 3.

ETF #3: Fidelity MSCI Energy Index ETF (FENY)

FENY is an ETF by Fidelity and offers a top-heavy portfolio in the US energy segment. The ETF’s portfolio is broad and allocates funds to every aspect of the oil and gas industries, with some allocations dedicated to coal and renewables. Further, it tracks the MSCI USA IMI Energy 25/50 Index.

The fund has assets under management (AUM) of $1.46 billion. FENY’s top holdings include Exxon Mobil Corporation (XOM) with a 21.54% weighting, followed by Chevron Corporation (CVX) at 13.40%, and ConocoPhillips (COP) and EOG Resources, Inc. (EOG) at 6.86% and 3.73%, respectively.

The ETF has a total of 214 holdings, with its top 10 assets comprising 98.24% of its AUM. FENY’s expense ratio is 0.08% compared to the category average of 0.47%.

FENY pays an annual dividend of $0.73, which translates to a 2.98% yield at the current price level. Moreover, the fund’s dividend payouts have increased at a CAGR of 9.1% over the past three years. Notably, FENY has paid its dividends for 11 consecutive years.

FENY has surged 3.3% over the past year to close the last trading session at $24.38. It has a beta of 1.39. The fund’s NAV was $24.38 as of January 3, 2025.

FENY’s POWR Ratings reflect solid prospects. The fund has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

FENY has a B grade for Buy & Hold and Peer. Within the Energy Equities ETFs group, it is ranked #6 of the 46 ETFs.

To access all of FENY’s POWR Ratings, click here.

ETF #2: Dimensional Emerging Core Equity Market ETF (DFAE)

DFAE actively invests in emerging markets securities of all sizes with a slight preference for small-cap companies. The fund primarily aims to achieve long-term capital appreciation with a diversified portfolio of companies.

With $4.83 billion in AUM, the fund’s top holdings are Taiwan Semiconductor Manufacturing Co., Ltd. (TSM) with an 8.99% weighting, Tencent Holdings Ltd. (TCEHY) at 3.58%, Samsung Electronics Co., Ltd. at a 1.68% weight, and Alibaba Group Holding Limited (BABA) at 1.50%. The ETF has a total of 5986 holdings, with its top 10 assets comprising 20.40% of its AUM.

DFAE’s fund inflows were $673.50 million over the past six months and $1.19 billion over the past year. Also, the fund has a beta of 0.59.

DFAE’s annual payout of $0.60 translates to a 2.33% yield at the prevailing price level. The fund’s dividend payouts have increased at a CAGR of 10.2% over the past three years. In addition, the fund has paid dividends for four consecutive years.

DFAE has gained 7.5% over the past year to close the last trading session at $25.53. The fund’s NAV was $25.40 as of January 3, 2025.

DFAE’s sound fundamentals are reflected in its POWR Ratings. The fund has an overall rating of B, which translates to a Buy in our proprietary rating system.

The fund has an A grade for Peer and a B for Buy & Hold. Of the 46 ETFs in the Energy Equities ETFs group, DFAE is ranked #5.

Click here to see all the DFAE ratings.

ETF #1: Vanguard Energy Index Fund ETF Shares (VDE)

VDE tracks a market cap-weighted index, offering broad exposure to US equity stocks in the energy sector, as classified by GICS. The fund invests in energy companies, stretching across multiple sub-segments from the broadly defined energy space. It seeks to track the MSCI US Investable Market Energy 25/50 Index.

The fund has an AUM of $7.43 billion. Its top holdings include XOM with a 22.74% weighting, followed by CVX at a 13.26% weighting, and COP and EOG at 6.63% and 3.65%, respectively. VDE has a total of 109 holdings, with the top 10 assets comprising 63.38% of its AUM. The fund has an expense ratio of 0.10% compared to the category average of 0.47%.

VDE’s annual dividend of $3.92 yields 3.17% at the current price level. The fund’s dividend payouts have increased at a CAGR of 6.9% over the past three years and 7.1% over the past five years. VDE paid dividends for 18 consecutive years.

VDE has gained 3.2% over the past year to close the last trading session at $123.83. The fund has a NAV of $123.85 as of January 3, 2025.

VDE’s POWR Ratings reflect its strong outlook. The ETF has an overall rating of B, which translates to a Buy in our proprietary rating system.

VDE has a B grade for Buy & Hold and Peer. The fund is ranked #4 in the list of 46 ETFs in the same group.

To access all the POWR Ratings for VDE, click here.

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VDE shares were trading at $123.43 per share on Monday afternoon, down $0.40 (-0.32%). Year-to-date, VDE has gained 1.75%, versus a 1.44% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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