Energy ETFs returned 43% this year. Two refiners pulled even with the majors
Energy (Broad) ETFs such as XLE have returned 42.9% year to date through September 2026, with a refining boom matching Exxon and Chevron inside cap-weighted funds.
President Donald Trump said Tuesday he backs a ban on US diesel exports, a political answer to pump prices that has already started to hit the stocks that made energy funds the surprise winners of 2026. Marathon Petroleum fell 5.3% on Monday and 3.2% on Tuesday. Valero Energy fell 4.8% and 4.1%. They still show year-to-date total returns of 146% and 139%.
That pair occupies 9.7% of State Street's Energy Select Sector SPDR ETF XLE, the $40.0 billion default way to own US energy. Exxon Mobil and Chevron occupy 40.8%. Measured on the fund's latest reported weights as of September 21, which give extra credit to names that have already grown, Marathon and Valero's year-to-date price gains of 139.6% and 131.7% contribute 13.1 percentage points through Tuesday, almost the same as the 13.2 percentage points from Exxon and Chevron combined. Exxon alone, at 7.4 percentage points, is still the largest single contributor. A diesel-margin boom pulled even with the integrated majors inside a cap-weighted oil fund.
XLE itself has returned 42.9% year to date through Wednesday, September 23, with dividends reinvested, against 13.9% for the S&P 500 ETF SPY and 21.1% for the Nasdaq-100 ETF QQQ. Around 10:09 a.m. Eastern, XLE was up 1.2% at $62.54 as Brent crude traded at $101.32 a barrel and US crude at $91.55. The S&P 500 was down 0.5%. Energy is still working. The question is which energy you actually own.
Diesel paid. The majors collected.
The physical market that produced those refiner returns is distillate. The US Energy Information Administration put the national average retail diesel price at $6.29 a gallon as of Monday, September 14, and said US distillate inventories would fall below 100 million barrels in September and stay below the 2021-2025 five-year low through much of 2027. US refineries were running at 97% of capacity in the week ended September 11. Tight product, full plants, and a still-constrained Strait of Hormuz is a refiner's setup. It is a much noisier setup for everyone else.
Iran said this week it could reopen Hormuz within seven days if the United States eases military pressure and lifts a blockade on Iranian ports. US officials held talks with Iranian envoys in New York. Brent, at $101, is still sitting above the EIA's September outlook, which has the spot price averaging about $90 a barrel in the second half of 2026 and $74 in 2027. The same outlook has US crude production at 13.8 million barrels a day this year. The bull case in the forecasts is a tight 2026. The bear case is written on the next line.
Inside XLE, that split is already visible.
Two refiners have more than tripled Exxon's year-to-date return
Alerian's Energy Infrastructure ETF ENFR, built around Energy Transfer, Enterprise Products, Enbridge, Williams, and Kinder Morgan, has returned 26.6% year to date: a pipeline year, not a refining one. EQT, a natural-gas producer, is down 3.5% while Henry Hub gas trades near $3.11. VanEck's Oil Refiners ETF CRAK, a 31-stock global refining sleeve with $590 million in assets and a 0.61% fee, has returned 71.5%. A dedicated oil-services fund, VanEck's OIH, has returned 39.3%, in line with the majors, not the refiners.
Broad energy, this year, was a product-margin story that cap-weighted sector funds happened to contain.
The funds that look diversified mostly are not
XLE tracks the Energy Select Sector Index, the energy companies in the S&P 500. It holds 21 stocks. Exxon is 23.1%. The top ten names are 77.3%. Average daily turnover is about $2.0 billion, which is why it is the trading vehicle, the 401(k) default, and the thing people mean when they say they bought energy.
Vanguard's Energy ETF VDE looks like the grown-up version on a fact sheet: 112 holdings, a 0.09% fee, $13.2 billion in assets, and the MSCI US Investable Market Energy 25/50 Index, which reaches into mid-caps and small-caps. Exxon is still 21.9%. The top ten are still 65.7%. Weight overlap with XLE is 82.7%. The extra 90 names are real. They do not change the bet. Year to date, VDE has returned 42.1%, a rounding error away from its giant cousin.
Invesco's S&P 500 Equal Weight Energy ETF RSPG is the actual construction break. It equal-weights the S&P 500 energy cohort, rebalances quarterly, and charges 0.40% on $613 million of assets. Kinder Morgan is the largest position, at 4.8%. Exxon is 4.7%, not 23%. The top ten are 46.5%. Weight overlap with XLE is 65.4%; the names are almost the same, the sizes are not. Year to date it has returned 42.2%, and 47.7% over one year, a hair ahead of XLE's 47.0%. Equal weight did not produce a different 2026. It produced a different risk: less of any one company, more of the smaller producers, and a fund a fraction of the size.
The year-to-date column is a trap. It makes six different machines look like one trade. They are not.
AUM and fees are the latest fund figures; holdings are as of September 21-23. Returns are total returns through Wednesday, September 23. iShares' IYE charges 0.37%, more than four times XLE, for a year-to-date return that sits in the same cluster: the expensive clone is the one to notice, then leave.
The power story is next door, and it has not paid
GICS, the sector map these index funds follow, treats energy as oil, gas, consumable fuels, and the equipment that serves them. It is not the utility that would bill a data center, not the grid, and not the solar farm. XLE is 100% energy by that map: 91.5% oil, gas, and consumable fuels and 8.5% energy equipment and services, as of September 21. NextEra Energy does not appear in the fund. It is 13.0% of the utilities fund XLU, whose entire book is utilities. Southern Company, Duke Energy, Constellation Energy, and American Electric Power complete the top five; Constellation, an independent power producer, is 6.5% of XLU and is absent from XLE.
The companies that generate and sell electricity had a different year. XLU has returned -4.6% year to date. SPY itself is only 3.5% energy and 2.0% utilities; Exxon is a 1.0% position, the first energy name in the S&P 500 portfolio. Adding a broad energy ETF is a real overlay on a 500-stock fund, not a double-up on something already owned in size, and it is not a way to own the power-and-grid sleeve. The energy fund holds Exxon. The utilities fund holds NextEra.
Diesel policy meets a 43% year
Record-adjacent diesel prices produced the political impulse for an export ban; Reuters reported analysts arguing a ban would raise global diesel prices and force lower refinery runs. Marathon and Valero's two-day slide is that argument hitting a pair of stocks that had already doubled. EIA's own 2027 Brent figure of $74 is the other argument: today's earnings are being capitalized at prices the agency does not expect to last.
A problem at Exxon or Chevron is a problem for every cap-weighted energy ETF, including the ones that advertise 100-plus holdings.
Over five years XLE has returned 201%, against 84.6% for SPY. The theme, in September, is not whether energy worked. It is that "Energy (Broad)" worked as a label for a refining boom, a still-tight oil balance, and a pair of mega-cap companies that happen to live in the same index. The electricity system, the gas producers, and the pipelines each told a different story. The next move in diesel policy, or in Hormuz, will not hit those stories the same way.
Frequently asked
What drove energy ETFs to a 42.9% year?
A refining boom: tight distillate inventories, 97% refinery utilization, and $6.29 diesel lifted Marathon Petroleum and Valero to year-to-date total returns of 146% and 139%.
Does owning a fund with more holdings change the bet?
Not much, since Vanguard's VDE holds 112 names but Exxon is still 21.9%, overlap with XLE is 82.7%, and its 42.1% year-to-date return is a rounding error away.
Do broad energy ETFs give me exposure to power and the grid?
No, GICS treats energy as oil, gas, fuels and their equipment, so NextEra and Constellation sit in the utilities fund XLU, which has returned -4.6% year to date.
Why did Marathon and Valero fall this week?
President Trump said Tuesday he backs a ban on US diesel exports, and analysts cited by Reuters argued a ban would raise global diesel prices and force lower refinery runs.