Oil & Fortunes: A SPDR Sortilege

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The price of that black, viscous stuff they dig out of the earth – oil, yes, still with the digging – has been doing a rather enthusiastic impression of a startled dragon lately. Apparently, a spot of bother in a region known for both sunshine and a disconcerting fondness for geopolitical gamesmanship1 has curtailed the flow. We’re talking around a hundred dollars a barrel, which, if you recall your history (or just ask someone who does), is a price point last seen when sensible shoes were all the rage. Rumours abound, whispered by those who deal in such things, that it could even reach two hundred. Two hundred! Which would, naturally, be terrible for most people, but rather splendid for those who happen to own a significant portion of the digging equipment.

One can’t help but observe that fortunes are made not by solving problems, but by capitalizing on them. And in this particular instance, the State Street Energy Select Sector SPDR ETF (XLE +0.33%) is rather neatly positioned to do just that. It’s currently enjoying a surge, up around 29% this year – a performance that makes the S&P 500‘s modest dip of 3% look positively… restrained. Now, before you start imagining yachts and miniature volcanoes for your garden, let’s examine the runes2.

The Fund of Fuels

This SPDR, you see, isn’t about betting on the whims of individual oil barons (though one suspects they’re doing quite nicely, thank you). It’s a collection of the big players – the companies that actually do the digging, the refining, the general business of turning unpleasant subterranean goo into something that powers, well, pretty much everything. It holds the energy stocks that are part of the S&P 500, which is a bit like having a safety net woven from shares in companies that are, by their very nature, somewhat volatile. There are only 22 holdings, but they’re the heavyweights: ExxonMobil, Chevron, and ConocoPhillips account for nearly half the fund’s entire portfolio. Which is a bit like having all your eggs in a basket made of… well, oil derricks.

There’s risk, naturally. Commodity prices are notoriously fickle. But it can offer a hedge against rising prices while still investing in companies that, generally speaking, know what they’re doing. Or at least have the resources to hire people who do. It’s a bit like insuring your castle against dragon attacks – expensive, but potentially a bargain if a dragon actually does show up.

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A Long-Term Sortilege?

Now, this fund hasn’t exactly been setting the world on fire in recent years. It’s underperformed the market for the last three, which suggests it might be due for a bit of a bounce. And with oil prices doing their current impression of a rocket launch, it just might get it. But even if the price of oil decides to take a nap, this isn’t necessarily a bad investment. It’s about the long haul. With a low expense ratio of 0.08%, a dividend yield of 2.6%, and a portfolio of generally solid companies, it’s a way to generate some income and diversify. It’s not about getting rich quick; it’s about avoiding being poor slowly.

And that, my friends, is a perfectly sensible strategy in a world that is, let’s be honest, anything but.

1

The precise location is, as always, a matter of delicate diplomacy and conveniently obscured maps. Let’s just say it’s somewhere where the sand is hot and the politics even hotter.

2

Runes, in this context, refer to financial charts and analyst reports. Though, admittedly, sometimes they look remarkably similar.

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2026-03-14 01:04