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Which ETF Is A Better Investment These Days, XLE Or VDE?


  • The XLE is the gold standard.
  • VDE is smaller and more flexible.
  • Expense ratios favor VDE, liquidity favors XLE.
  • Smaller caps could improve results.
  • Both could be one step ahead of crude oil.

The crude oil price is hanging in there at over $60 per barrel on the nearby NYMEX crude oil futures contract. So far in 2018, the benchmark price has traded from a low of $58.07 per barrel on February 9 to a high of $66.66 on January 25. The low came on a day that the dollar was strong, and the high when the U.S. currency reached a low Meanwhile, even though the dollar made a lower low on February 16, crude oil did not rise to a new peak price. As the dollar has recovered since the middle of February, crude oil has remained over the $60 per barrel level.

Meanwhile, volatility in the stock market has caused the price of energy-related stocks to fall from highs on January 24. The benchmark XLE ETF had declined from a high of $78.39 on that day to a low of $64.45, and it has only managed to recover to the $67.66 level as of the close of business on March 5. Crude oil settled on that day at $62.57, 6.1% below its peak, while the XLE was 13.7% lower. Oil equities have underperformed the action in the crude oil market because of their beta with the overall stock market. Meanwhile, the smaller-cap Vanguard Energy ETF product declined even more than the XLE on a percentage basis from its high in late January to its mid-February low. Time will tell if the oil equities are telling us something about the price of the energy commodity, or if they are just suffering from the volatility in the stock market.

The XLE is the gold standard

When it comes to the ETF that most market participants watch for a read on the oil equity sector, the Energy Select SPDR or XLE is the gold standard. The

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This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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