XOP holds US oil and gas exploration and production companies at roughly equal weight, so it has more exposure to small and mid-sized producers than cap-weighted energy funds such as XLE. Returns follow oil and natural gas prices closely, and smaller producers often have more debt and higher volatility than large integrated companies. The fund can rise sharply in energy rallies and fall sharply when prices decline. Because it excludes refiners and pipelines, it is a more direct bet on commodity prices than broad energy funds.
