ProShares S&P 500 Ex-Energy ETF (SPXE)

The ProShares S&P 500 Ex-Energy ETF — ticker SPXE — is an exchange-traded fund that holds nearly all of the S&P 500’s large-cap stocks but deliberately excludes every energy company: oil majors, natural-gas producers, refineries, pipeline operators, and utilities. It is an investment product for people who want broad American equity exposure but do not want to own energy stocks.

The idea behind SPXE is straightforward: some investors prefer not to own energy companies for environmental, ethical, or financial reasons. An investor might believe oil and gas are secular decline industries, vulnerable to the eventual transition away from fossil fuels. Another might want to align their portfolio with climate commitments. A third might simply think energy stocks are too volatile or too cyclical. Rather than pick and choose among hundreds of stocks, SPXE applies a single exclusion rule.

The fund tracks the S&P 500 Ex-Energy Index, which starts with the standard S&P 500 large-cap index and removes every ticker classified as part of the energy sector. This typically means 20 to 30 stocks — the petroleum refiners, drillers, integrated oil companies, and utilities are gone. What remains are the other 470 stocks: the technology giants, the banks, the industrials, consumer companies, and healthcare firms. SPXE therefore holds roughly the same number of companies as a standard S&P 500 fund, but with a clear sector omission.

Because SPXE is missing an entire sector, its composition and returns differ from the broad market. When energy stocks do well — during supply shocks, geopolitical crises, or periods of high inflation — SPXE lags the full S&P 500. When energy struggles, SPXE often outperforms. This pattern creates a real performance dispersion: in some years SPXE will be significantly ahead of the full index, in others significantly behind. An investor holding SPXE is implicitly betting that the energy sector will underperform or is simply accepting that bet as a trade-off for its ethical or ideological alignment.

The expense ratio on SPXE is very low, typically around 0.20% annually, reflecting the simplicity of index replication with a sector subset. The fund trades like any stock with good liquidity, and it is large enough that buying or selling shares should not move the market. For investors managing significant sums, SPXE’s expense ratio and tight bid-ask spread make it efficient to buy and hold.

A key consideration is what SPXE is not. It is not a climate or ESG (environmental, social, governance) fund that screens companies for carbon intensity or sustainability practices. SPXE simply says: if your sector classification is energy, you are out. Some tech companies own coal or gas assets through subsidiaries; utilities deliver renewable electricity. SPXE includes both because classification, not actual business practices, determines the cut. This means SPXE does not guarantee you are investing in “clean” companies — it only guarantees you are not owning companies legally classified as energy.

The other major risk is concentration. By excluding an entire sector, SPXE tilts the portfolio toward whichever sectors remain. If tech stocks soar, SPXE’s return compounds because technology becomes a larger fraction of the fund. If banks rally, SPXE rallies along with its financial holdings. In the late 2010s and early 2020s, this meant SPXE held a lot of mega-cap technology stocks and rode their outperformance. This can feel like a feature when those stocks are winning but looks like a weakness when they struggle. An investor in SPXE is not diversified in the way a pure S&P 500 fund is; they are diversified subject to the constraint that they own zero energy exposure.

For researchers interested in SPXE, the starting point is the ProShares fact sheet and the index methodology from the index provider. Compare SPXE’s returns to the full S&P 500 Index over various time periods to see the performance cost or benefit of the energy exclusion. Look at the top holdings to understand which sectors are now overweighted. Read the prospectus to confirm the exact exclusion criteria and any planned changes. Most useful is to examine periods when energy stocks surged and see how much SPXE trailed — that underperformance is the price of avoiding the sector.

SPXE is a fund for investors with a strong view about energy or a commitment to exclude it. For buy-and-hold investors without a particular energy view, it introduces an unnecessary tilt. For those who do want to avoid energy, it is simpler than hand-picking 470 stocks and keeping up with index changes as companies move in and out of the S&P 500.