Which Energy ETF Should You Buy: State Street Energy or iShares Clean Energy?
Key Points
State Street Energy Select Sector SPDR ETF offers a lower expense ratio and higher yield than iShares Global Clean Energy ETF.
iShares Global Clean Energy ETF is focused on global clean energy while State Street Energy Select Sector SPDR ETF targets domestic oil and gas.
State Street Energy Select Sector SPDR ETF has achieved higher total returns and lower maximum drawdowns over the last five years
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The State Street Energy Select Sector SPDR ETF (NYSEMKT:XLE) and the iShares Global Clean Energy ETF (NASDAQ:ICLN) both target the energy sector but occupy different niches.
The SPDR offers lower costs with fossil fuel concentration, while the iShares fund provides a more expensive, global renewable energy focus. Investors often choose between them based on cost, environmental, social, and governance (ESG) preferences, and yield requirements.
Snapshot (cost & size)
| Metric | ICLN | XLE |
|---|---|---|
| Issuer | iShares | SPDR |
| Expense ratio | 0.39% | 0.08% |
| 1-yr return (as of June 3, 2026) | 83.70% | 45.00% |
| Dividend yield | 1.10% | 2.50% |
| Beta | 1.07 | 0.41 |
| AUM | $3.3 billion | $40.4 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
XLE is the more affordable option, with an expense ratio of 0.08%, which is significantly lower than ICLN’s 0.39%. Additionally, XLE provides a higher payout, with a distribution yield of 2.50% compared to 1.10% for the iShares fund.
Performance & risk comparison
| Metric | ICLN | XLE |
|---|---|---|
| Max drawdown (5 yr) | (57.10%) | (26.10%) |
| Growth of $1,000 over 5 years (total return) | $1,110 | $2,533 |
What's inside
The State Street Energy Select Sector SPDR ETF (NYSEMKT:XLE) provides 100% exposure to the energy sector, specifically targeting U.S. S&P 500 companies. Its portfolio is concentrated with 21 holdings, and its largest positions include Exxon Mobil Corp (NYSE:XOM) at 22.27%, Chevron Corp (NYSE:CVX) at 16.69%, and ConocoPhillips (NYSE:COP) at 6.80%. This fund was launched in 1998 and has a trailing-12-month dividend of $1.49 per share.
In contrast, the iShares Global Clean Energy ETF (NASDAQ:ICLN) maintains a broader, global portfolio of 105 holdings across utilities (33%), industrials (28%), and energy (26%). Its largest positions include Bloom Energy Corp (NYSE:BE) at 12.36%, First Solar Inc (NASDAQ:FSLR) at 10.01%, and Nextpower Inc (NASDAQ:NXT) at 7.95%. Launched in 2008, the fund has a trailing-12-month dividend of $0.27 per share. Unlike the SPDR fund, ICLN employs a specific ESG screen to filter its clean energy constituents.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Choosing between the State Street Energy Select Sector SPDR ETF and the iShares Global Clean Energy ETF comes down to a fundamental industry choice: legacy fossil fuels or renewables.
The State Street fund is a pure-play on oil and gas, consumable fuels, and energy equipment and services companies. Because a large portion of the fund is concentrated on two of the largest oil and gas producers, ExxonMobil and Chevron, buying this ETF means you’re largely betting on mega-cap integrated oil companies.
These are also some of the strongest players and dividend growth stocks in the industry. That also explains why this fund offers a larger yield than the iShares fund. While Chevron has raised its dividend for 39 consecutive years, ExxonMobil has increased its dividend for 43 straight years.
The iShares Global Clean Energy ETF targets global companies involved in renewable energy generation. Think solar, wind, hydrogen, and other technologies. The top two holdings, Bloom Energy and First Solar, are hydrogen fuel cell and solar pure-plays, respectively.
Importantly, the fund owns the largest clean energy companies from across the world, offering investors a chance to bet on global growth, and not just the U.S. unlike the State Street fund. The iShares fund offers a lower yield but higher growth potential, particularly amid the artificial intelligence (AI) data center boom that demands voracious power consumption.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy, Chevron, First Solar, and Nextpower. The Motley Fool recommends ConocoPhillips. The Motley Fool has a disclosure policy.
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