In recent weeks, the stock market has been picking up steam and the S&P 500 has hit new records. Year to date, it's up around 4%, which is a big improvement from the end of March when it was well into negative territory.
But as well as the index has been doing, there's one part of the economy that's still outperforming it by a wide margin, and that's oil and gas. With commodity prices remaining high and plenty of uncertainty in the Middle East, oil and gas stocks have been surging, and that's evident with many exchange-traded funds (ETFs) in the sector doing exceptionally well.
The iShares S&P/TSX Capped Energy Index ETF (TSX:XEG) has soared 34% thus far in 2026, easily beating the broad index. It focuses on the Canadian energy sector and has 26 holdings in its portfolio, featuring some of the biggest names in energy, including Suncor Energy, Canadian Natural Resources, and Cenovus Energy. These are all stocks that can stand to benefit significantly from higher oil prices, and they are also the three largest holdings in the ETF.
For investors looking for a way to take advantage of rising oil prices, this can be a good ETF to consider for its exposure to top oil and gas stocks. Plus, it also yields 2.7%, which is an attractive payout that can boost your overall returns.
The management expense ratio for the fund is 0.60%, which isn't terribly low but given how well it's doing and its high yield, it may be worth it. Over the past five years, this ETF has soared more than 250%, and that's without factoring in its above-average yield.
