What is the primary difference in structure between USO and XOP?

USO is a Commodities Focused fund that typically holds oil futures contracts to track crude oil prices. In contrast, XOP is an Equity Energy fund that holds shares of companies involved in oil and gas exploration and production. This fundamental structural difference means USO tracks commodity price movements directly, while XOP tracks the stock market performance of energy firms. Consequently, their risks, rewards, and market behaviours differ significantly.

How do futures-based ETFs like USO differ from equity ETFs like XOP?

Futures-based ETFs such as USO use derivative contracts to mimic the price of a commodity. They do not own physical oil. Equity ETFs like XOP own actual stocks of companies. This distinction impacts cost and risk. Futures must be rolled over periodically, which can incur costs if the market is in contango. Equity ETFs bear company-specific risks, such as management decisions or operational issues, but do not face contract roll expenses.

How do the expense ratios of USO and XOP compare, and why does it matter?

USO has an annual expense ratio of 0.60%, while XOP’s is 0.35%. This means XOP costs 0.25 percentage points less per year to hold. Over time, lower fees can significantly impact net returns, especially for long-term investors, as high fees create a persistent drag on performance. For example, holding $10,000 would cost $60 for USO versus $35 for XOP annually. Investors should consider these ongoing costs when comparing funds.

What kind of investing goals is USO typically associated with?

USO is often associated with investors seeking direct exposure to crude oil price movements for trading or short-term hedging purposes. Its commodity-focused structure aims to mirror oil futures prices. It is generally not designed for long-term buy-and-hold investing due to potential costs from rolling futures contracts. Investors using this fund are usually interested in the asset class itself rather than the earnings or dividends of energy companies.

What kind of investing goals is XOP typically associated with?

XOP is typically associated with investors seeking exposure to the energy sector through company equities. It appeals to those who want potential capital appreciation from operational improvements, production growth, or rising energy prices. Because it holds stocks, it may also provide income through dividends. Investors choosing this fund are usually betting on the profitability and stock performance of oil and gas exploration and production companies rather than just commodity prices.

Which fund pays a higher dividend yield according to the data?

XOP has a dividend yield of 1.71%, whereas USO has a dividend yield of 0.00%. This difference exists because XOP holds equity shares of companies that may distribute profits to shareholders. USO holds futures contracts, which do not generate dividends. Therefore, investors prioritising regular income may view XOP as more suitable for yield, while USO is viewed as a pure capital appreciation or trading vehicle.

What are the net assets of USO and XOP, and what does size indicate?

USO has net assets of $2.0 billion, while XOP holds $4.2 billion. Generally, larger asset bases can suggest greater liquidity and potentially lower bid-ask spreads for trading. However, size alone does not guarantee performance. Investors often view larger funds as more stable and easier to trade. XOP is more than twice the size of USO in terms of assets under management, which may influence trading costs and market depth.

Do USO and XOP have overlapping top ten holdings?

No, USO and XOP have no overlapping top ten holdings. XOP’s top holdings include energy companies like DINO, MPC, and VLO. USO’s top holdings are not listed as specific equities in the provided data, as it tracks futures. This lack of overlap confirms their different exposure mechanisms: one to corporate equities and the other to commodity derivatives. They will not necessarily move in lockstep with each other.

What are some key top holdings in XOP?

XOP’s top holdings include DINO (2.89%), MPC (2.87%), VLO (2.87%), and PSX (2.83%). These are all major players in the oil and gas sector, ranging from exploration and production to refining and distribution. Since these are individual company stocks, XOP’s performance is directly tied to the financial health and operational success of these specific firms, introducing company-specific risks alongside sector risks.

What does 'not available' mean for top holdings of USO in this comparison?

For USO, the top holdings are marked 'not available' because it is a futures-based ETF. It does not hold traditional company shares in the same way an equity fund does. Its primary exposure is to oil futures contracts, such as WTI or Brent crude. Therefore, a list of company stocks is not applicable or available for this fund type, highlighting its structural difference from equity ETFs like XOP.

How long have USO and XOP been in existence?

USO was established on 10 April 2006, and XOP on 19 June 2006. Both funds have been operating for a significant period, offering investors a long track record of exposure to the energy sector through different vehicles. This longevity suggests they have survived various market cycles, including volatility in oil prices and shifts in the energy market structure, making them established options in their respective categories.

What is the primary risk factor for USO regarding its expense ratio?

USO’s expense ratio of 0.60% is considered high compared to standard equity ETFs. For a commodity fund, this fee, combined with potential costs from rolling futures contracts (especially during contango), can create a significant drag on returns. While XOP’s 0.35% fee is also an expense, USO’s higher ratio is more impactful given its structure. This makes it potentially less efficient for holding over long periods.

USO vs XOP

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

Compare United States Oil (USO) and SPDR S&P Oil & Gas Exploration & Production ETF (XOP). This page outlines differences in fees, holdings, dividends, and market tracking. USO offers 0.60% expense ratio and $2.0bn net assets, while XOP has 0.35% and $4.2bn. Educational content, not financial advice.

Compare United States Oil (USO) and SPDR S&P Oil & Gas Exploration & Production ETF (XOP). This page outlines differences in fees, holdings, dividends, and market tracking. USO offers 0.60% expense ra...

Fund Snapshot

Key Fund Metrics

USO

Metric

XOP

0.60%

Expense Ratio

0.35%

0.00%

Dividend Yield

1.71%

$2.04B

Net Assets

$4.20B

26

Holdings

54

Apr 10, 2006

Inception Date

Jun 19, 2006

–

Index Tracked

–

Commodities Focused

Fund Category

Equity Energy

XOP costs about $25.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

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Investment Analysis

USO

Pros

USO provides direct exposure to crude oil movements without the operational complexities associated with energy company equities.
Established in 2006, this fund has a long track record of offering a simple route to oil futures.
Its commodity focus allows for diversification benefits when traditional equities and energy stocks diverge in performance.

Considerations

The 0.60% expense ratio is high compared to standard equity ETFs, creating a persistent drag on returns.
Oil futures contracts often suffer from contango, which erodes value during the roll process.
No dividends are paid as the fund holds futures, meaning no regular income stream for investors.

XOP

Pros

XOP targets oil and gas exploration and production equities, offering potential upside from operational improvements and rising output.
With $4.2 billion in net assets, it is larger and likely more liquid than the comparable oil futures fund.
The 0.35% expense ratio is significantly lower than the commodity fund, making it cost-efficient for long-term holding.

Considerations

Exposure is limited strictly to the energy sector, increasing volatility when oil and gas prices fluctuate sharply.
The fund holds individual equities, introducing company-specific risks such as management decisions or operational failures.
Concentration in midstream and upstream companies can lead to correlated movements that may lack true diversification.

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