The Texas Capital Texas Oil Index ETF (OILT) climbed 12.5% in July, outpacing both broad market equities and energy sector peers. During the month, the State Street SPDR S&P 500 ETF Trust (SPY) held steady, while the State Street Energy Select Sector SPDR ETF (XLE) rose 12.1% over the same period.

Key Takeaways

• OILT outpaced broad markets in July, rising 13.0% compared to a 0.3% gain for broad market SPY and an 11.9% return for broad energy XLE.
• Oil and gas exploration and production companies outperformed during the month, driving the fund’s outperformance.
• Top-contributing holdings included Occidental Petroleum (OXY) and SM Energy (SM), which were up 17.5% and 24.6%, respectively.

Upstream Concentration Drives Performance Advantage

OILT’s targeted exposure to companies that extract oil and gas within Texas provided a clear performance edge during July’s rally in oil prices. While market-cap-weighted energy benchmarks like XLE balance pure-play producers with integrated mega-caps, OILT leans heavily into targeted pure plays. Notably, exploration and production (E&P) companies have the highest sensitivity to oil spot price appreciation in the energy sector.

OILT allocates 89.1% of its portfolio to upstream energy companies, compared to 68.8% for a broad energy play like XLE. Within that upstream umbrella, pure-play oil and gas exploration and production (E&P) firms represent 69.7% of OILT’s weight, whereas XLE allocates just 23.2% to E&Ps.

Key Attribution and Top Contributors

OILT tracks the Alerian Texas Weighted Oil & Gas Index (ATXWO), which includes companies such as Exxon Mobil (XOM), Diamondback Energy (FANG), ConocoPhillips (COP), and Occidental Petroleum (OXY).

Index attribution data reveals strong contributions from core holdings across the board. Occidental Petroleum led overall contribution, returning 17.5% in July and adding 1.3% to total index return.

Other significant contributors included SM Energy (SM), which surged 24.6% to contribute 1.1% to the index, and ConocoPhillips, rising 15.9% to add 1.1%. Diamondback Energy also surged 15.5% during the month, adding 1.1% to index performance.

See more: Navigating the Energy Surge: A Value-Chain Guide to Energy ETFs

Exposure Down the Cap Spectrum Distinguishes OILT 

A key structural difference between OILT and traditional energy benchmarks is market capitalization weightings. While mega-caps make up nearly the entirety of broad energy ETFs, OILT holds 19.0% in midcap stocks and 4.2% in small-caps, offering exposure down the cap spectrum.

Furthermore, OILT holds an effective number of holdings of 20, keeping top-10 concentration at a manageable 59.4%. Furthermore, OILT limits single-stock concentration, with top holding ExxonMobil weighted at 7.4%, while broader energy ETFs commonly weight it above 20%.

For more news, information, and analysis visit the Thematic Investing Content Hub.

vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for OILT, for which it receives an index licensing fee. However, OILT is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OILT.