Best Energy ETFs by Performance

See the different types of energy ETFs and details on the top performers.

Reviewed by: Kent Thune
Edited by: Kent Thune

Energy sector ETFs were top performers in 2022, but which will be the best energy ETFs for 2023? We provide a primer on energy ETFs, including their potential benefits and risks, the available types of energy sector funds and details on the top performers through the first quarter of 2023. 

What Is an Energy ETF? 

An energy ETF is a type of investment exchange-traded fund that focuses on companies in the energy sector, such as those involved in oil, gas, coal and renewable energy. The typical energy ETF is designed to track the performance of a specific energy-related index or benchmark, and its value is determined by the combined performance of the underlying stocks held in the fund. 

Energy ETFs provide investors with a way to gain exposure to the energy sector without having to buy individual stocks. They offer a diversified portfolio of energy-related securities, which can help to reduce investment risk. Energy ETFs can also provide investors with the potential for long-term growth, as well as current income, as many energy companies pay dividends to their shareholders. 

Best Energy ETFs for 2023 Based on Performance 

The best energy ETFs for 2023 may come from a range of industries within the sector as the competing interests of OPEC cuts in supply may point to higher prices for oil, yet the potential for lower demand in a weakening economy could be a downer for oil, yet a potential boost for alternative energy sources.

Here are the best energy ETFs based on performance through March 31, 2023. 

Ticker Fund YTD Return AUM Expense Ratio
SOLR SmartETFs Sustainable Energy II ETF 9.40% $5.58M 0.79%
CNRG SPDR S&P Kensho Clean Power ETF 5.91% $349.96M 0.45%
HDRO Defiance Next Gen H2 ETF 4.07% $38.84M 0.30%
CRAK VanEck Oil Refiners ETF 1.90% $38.90 0.59%
PXJ Invesco Dynamic Oil & Gas Services ETF -2.28% $96.89 0.63%

Benefits and Risks of Investing in Energy ETFs 

There are many potential benefits of investing in energy ETFs, such as potential for long-term growth and current income. However, before buying shares, investors should weigh the associated risks, such as concentration risk and political and regulatory risk. 

Benefits of Investing in Energy ETFs 

  • Diversification: Energy ETFs invest in a broad range of energy companies, which can help to reduce investment risk by diversifying across multiple companies and subsectors within the energy industry. 
  • Potential for long-term growth: Energy ETFs may offer investors exposure to the potential for long-term growth in the energy sector, which is driven by global demand for energy and the development of new technologies. 
  • Source of income: Many energy ETFs, especially the large caps, pay dividends, which can provide a source of income for investors. 
  • Access to specific energy subsectors: Some energy ETFs are designed to track specific subsectors of the energy industry, such as renewable energy, or oil and gas exploration and production. This can provide investors with targeted exposure to a specific area of the energy market. 
  • Liquidity: Energy ETFs are traded on stock exchanges, which means they can be bought and sold easily throughout the trading day. 

Risks of Investing in Energy ETFs 

  • Volatility: The energy industry can be volatile, with fluctuations in energy prices and changes in government policies and regulations affecting the performance of energy companies. This can result in high levels of volatility for energy ETFs. 
  • Concentration risk: Some energy ETFs may be heavily concentrated in a particular subsector of the energy industry or in a few large companies, which can increase the risk of losses if that subsector or company performs poorly. 
  • Political and regulatory risks: Energy companies can be affected by changes in government policies and regulations, which can impact their profitability and stock prices. 
  • Environmental risks: Some energy companies may face environmental risks, such as the potential for oil spills or environmental damage from coal mining. These risks can impact the financial performance of the companies and the ETFs that hold their stocks. 

Types of Energy ETFs 

There are several types of energy ETFs, which vary in terms of the companies and subsectors they invest in. Here are some of the most common types of energy ETFs: 

Bottom Line 

The best energy ETFs offer investors several benefits including current income and the potential for long-term growth. However, it's important to note that the performance of energy ETFs can be affected by a range of factors, including energy prices, global demand for energy, and government policies and regulations. Therefore, investors should carefully consider their investment goals and risk tolerance before investing.

Kent Thune is a finance writer for, focusing on educational content. Before coming to, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. Thune is also a practicing Certified Financial Planner and investment advisor based in Hilton Head Island, SC, where he lives with his wife and two sons.