VDE vs XOP: Which ETF Is Better in 2026?
A metric-by-metric comparison of Vanguard Energy Index Fund ETF Shares (VDE) and State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) — both Energy funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of July 25, 2026. ~5 minute read.
The Verdict
VDE and XOP compete directly — both are Energy funds chasing the same job in a portfolio. That makes this a genuine either/or: the index each tracks, what it costs, and how it has handled drawdowns are what separate them, not the broad exposure they give you.
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — VDE scores higher: 75.7 (Grade B+) versus 60.7 for XOP. That doesn't make XOP a bad fund; it means VDE currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Head-to-Head: Every Metric
| VDE | XOP | |
|---|---|---|
| Category | Energy | Energy |
| Expense ratio | 0.09% | 0.35% |
| Fund size (AUM) | $11.1B | $2.9B |
| Dividend yield | 1.47% | 0.79% |
| 1-year return | +42.00% | +38.64% |
| 3-year return | +50.73% | +30.62% |
| Volatility | 20.76% | 28.17% |
| Max drawdown | -21.41% | -34.98% |
| Sharpe ratio | 1.78 | 1.19 |
| ETFValuer score | 75.7 | 60.7 |
| Grade | B+ | C |
| Overall rank | #46 | #232 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
VDE is the cheaper fund, charging 0.09% a year versus 0.35% for XOP — a gap of 0.26 percentage points (about $26.00/year on a $10,000 position) that compounds meaningfully over a multi-decade holding period. See the ETF Fee Calculator for the exact dollar impact at your investment size and horizon.
What XOP's Fees Cost You
XOP charges an expense ratio of 0.35% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, VDE returned +50.73% versus +30.62% for XOP — a gap of about 20.1 percentage points. On risk, VDE has held up better historically, with a shallower max drawdown (-21.41% vs. -34.98%). VDE currently has the better risk-adjusted return (Sharpe ratio of 1.78 vs. 1.19), meaning it delivered more return per unit of volatility taken on.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (752 shared trading days), VDE and XOP show a high correlation of 0.945 — closely related, but not identical. Holding both would add very little diversification: when one falls, the other almost always falls with it. Treat these as alternatives to each other, not as complements in the same portfolio.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.945 | High — closely related, but not identical |
| R-squared | 89.4% | 89.4% of VDE's daily moves are explained by XOP's |
| Tracking error (annualised) | 10.22% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | VDE +15.41% · XOP +10.49% | VDE ahead by 4.91 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, VDE finished as much as +15.5 points ahead of XOP at the best extreme and -11.8 points at the worst — a 27.3-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
VDE and XOP hold 1 of the same companies among their top 10 positions. Those shared names make up 5.8% of VDE and 2.6% of XOP. That's modest duplication — the funds are mostly distinct at the top, so holding both can still add diversification.
| Shared Holding | VDE Weight | XOP Weight |
|---|---|---|
| ConocoPhillips | 5.78% | 2.63% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean VDE if…
- You want the lower running cost — 0.09% vs 0.35%, about $26 a year less on a $10,000 position
- Current income matters to you — it yields 1.47% against 0.79%
- It has been the calmer ride (20.8% volatility vs 28.2%) with a shallower worst-case fall (-21.4% vs -35.0%)
- You care about return per unit of risk — its Sharpe ratio of 1.78 beats 1.19
Lean XOP if…
- You prefer to keep holdings under one roof at State Street Investment Management
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is VDE or XOP better?
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — VDE scores higher: 75.7 (Grade B+) versus 60.7 for XOP. That doesn't make XOP a bad fund; it means VDE currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Which has the lower expense ratio, VDE or XOP?
VDE currently has the lower expense ratio (0.09% vs. 0.35%).
Can I hold both VDE and XOP?
You can, though the benefit is limited. At a correlation of 0.95, VDE and XOP fall together far more often than not, so owning both adds complexity and a second expense ratio without much real diversification. Most investors are better served picking one.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.