What is the largest oil ETF?

The Energy Select Sector SPDR Fund is the largest ETF focused on oil and gas exploration and production. The fund had more than $28 billion in assets under management (AUM) in early 2026, consisting of energy stocks listed in the S&P 500 index.

What is a good oil and gas ETF?

A good ETF for those seeking balanced exposure to the U.S. oil and gas sector is the SPDR S&P Oil & Gas Exploration & Production ETF. The fund had a roughly equal weighting to around 50 oil and gas stocks as of early 2026, differentiating it from many of the top oil and gas ETFs that have a market-weighting strategy. Its approach results in relatively high concentration in the largest oil and gas stocks, increasing an investor's risk.

Is an oil ETF a good investment?

An oil ETF can be a good investment. They give investors broad exposure to the oil market in a single investment. That helps mitigate the risks of investing in oil stocks that underperformed their sector peers due to company-specific problems like mismanagement or too much debt.

What is the best way to invest in oil?

The best way to invest in oil is through either a large integrated oil company, such as ExxonMobil, or an oil ETF. Either option provides investors with diversified exposure to the entire oil market value chain (production, midstream services, and refining and chemicals). Oil ETFs offer the most diversification since they own many oil stocks, helping to mitigate the risk that an investor is right on their thesis (oil prices will rise) but selects the wrong vehicle (an underperforming oil stock) to express that view.

What are the best crude oil ETFs?

The best crude oil ETFs are Energy Select SPDR Fund, Vanguard Energy ETF, Alerian MLP ETF, SPDR S&P Oil & Gas Exploration & Production ETF, and United States Oil Fund LP. Each provides investors with exposure to crude oil either directly (United States Oil Fund) or indirectly through oil stocks. These ETFs should rise with oil prices, with oil stock-focused ETFs having the potential to outperform crude prices.

Does Vanguard have an oil ETF?

Yes, Vanguard has an oil ETF. The Vanguard Energy ETF focuses on the energy sector, including companies involved in the production of oil and natural gas.

Do oil ETFs pay dividends?

Yes, most oil ETFs pay dividends. Oil ETFs focused on holding MLPs, such as the Alerian MLP ETF, offer higher dividend yields (more than 8% in early 2026).

Best Oil ETFs of 2026

Take a look at some of this year's top-performing oil ETFs and consider whether they deserve a spot in your portfolio.

By Matthew DiLallo – Updated Jan 30, 2026 at 12:59 PM EST | Fact-checked by Frank Bass

Key Points

Oil ETFs allow investment in oil markets through direct oil price exposure or industry stocks.
Investors can limit risks by choosing diversified ETFs or targeting specific oil sectors.
Oil ETFs offer varying strategies, fees, and dividend yields, influencing investment outcomes.

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Data source: ETF database. Assets under management as of Jan. 13, 2026. ETF = exchange-traded fund. WTI = West Texas Intermediate.

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XLE vs brent JAN 2026 — Image source: YCharts.

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2. Vanguard Energy ETF

The Vanguard Energy ETF (VDE +1.57%) is a broad-based fund providing investors with exposure to companies involved in producing energy products such as oil, natural gas, and coal. The fund held about 110 energy stocks in early 2026. However, because it also has a market-weight strategy, it is highly concentrated at the top. Its five largest holdings include:

ExxonMobil: 22.2% of the fund's holdings
Chevron: 15.0%
ConocoPhillips: 5.6%
Williams: 3.9%
Marathon Petroleum (MPC +2.86%): 3.2%

The oil ETF also features a low ETF expense ratio of 0.9%. Given its broader focus on energy stocks beyond those listed in the S&P 500, the ETF provides investors with even more diversification benefits for a low cost, helping to reduce risk. It can also deliver a solid performance compared to oil prices during a strong oil market:

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VDE vs brent JAN 2026 — Image source: Ycharts.

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3. Alerian MLP ETF

The Alerian MLP ETF (AMLP +0.82%) is a fund that allows investors to target energy infrastructure midstream master limited partnerships (MLPs). These companies make money by providing midstream services such as operating pipelines or liquefied natural gas (LNG) export facilities.

They tend to earn steadier cash flow than oil and gas producers, making them better oil dividend stocks since they tend to pay high-yielding dividends. In early 2026, the ETF offered a trailing-12-month yield of 8.1%, making it ideal for investors seeking to generate passive income from the oil market. The ETF had 13 holdings in early 2026, led by the following five:

Plains All American Pipeline (PAA +1.67%): 12.6% of the fund's holdings
Energy Transfer (ET +1.57%): 12.4%
Sunoco LP (SUN +1.65%): 12.3%
Western Midstream Partners (WES +1.74%): 12.5%
Enterprise Products Partners (EPD +0.26%): 11.6%

One drawback of the ETF is its relatively high expense ratio of 0.85%. The fees eat into the income that the fund's holdings produce. However, the cost can be worth it because it lets investors own a basket of income-producing energy companies with a single investment.

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It's also worth noting that this fund processes the Schedule K-1s sent by the MLPs and sends its investors a Form 1099. That reduces the tax complexities of investing in MLPs, which can be a deterrent for some investors. Because it's a yield-focused vehicle, dividend payments make up a sizable portion of the fund's total returns:

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5. United States Oil Fund LP

The United States Oil Fund (USO +3.41%) is an ETN that provides investors with more direct exposure to oil prices. It invests in futures contracts based on WTI prices. This approach allows investors to make a directional bet on the price of oil without having to engage in futures trading or risk that an oil stock investment will underperform the price of crude oil.

However, the fund has a rather hefty total expense ratio of 0.7%. The costs of rolling futures contracts can also eat into the fund's return over the long term, causing it to lag the price of oil over longer periods.

Because of these drags on performance, the oil ETF isn't an ideal long-term investment. Instead, it's best for making a short-term wager on crude oil prices since it tends to do a good job of tracking WTI prices over short periods:

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FAQ on investing in oil ETFs

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

Matt DiLallo has positions in Chevron, ConocoPhillips, Energy Transfer, and Enterprise Products Partners. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends ConocoPhillips and Enterprise Products Partners. The Motley Fool has a disclosure policy.

Best Oil ETFs of 2026

Take a look at some of this year's top-performing oil ETFs and consider whether they deserve a spot in your portfolio.

Key Points

2. Vanguard Energy ETF

3. Alerian MLP ETF

5. United States Oil Fund LP

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FAQ on investing in oil ETFs

What is the largest oil ETF?

What is a good oil and gas ETF?

Is an oil ETF a good investment?

What is the best way to invest in oil?

What are the best crude oil ETFs?

Does Vanguard have an oil ETF?

Do oil ETFs pay dividends?

Why invest in oil ETFs?

Types of oil ETFs

Top oil ETFs to consider

How to choose an oil ETF

Oil ETFs vs. Oil ETNs

The bottom line

Related investing topics

FAQ

3. Alerian MLP ETF

4. State Street SPDR S&P Oil & Gas Exploration & Production ETF

5. United States Oil Fund LP

1. State Street Energy Select SPDR ETF

2. Vanguard Energy ETF