XLE vs XOM

Investors seeking to participate in the energy sector may find themselves weighing the benefits of purchasing shares of an ETF index fund like Energy Select Sector SPDR Fund (XLE) or Exxon Mobil Corporation (XOM). One thing to consider when looking at a pooled investment is whether it has fees that reduce the benefits of the diversification offered by an index fund. With this particular ETF, the fees are quite low, at a mere 0.12%, since active management is not required. ETFs also tend to offer a more favorable tax treatment than mutual funds, due to the trust structure which is prevalent in the ETF industry, passing on more long-term gains than short-term gains despite the frequent trading involved in maintaining a pooled investment. A single stock like XOM, on the other hand, would give investors more control over the realization of gains losses. And, due to the fact that XOM is well diversified and integrated, it is highly correlated with the performance of the energy sector and XLE.