Does XOP’s History Make This Dip a Buy?

The oil and gas ETF has a habit of bouncing back from pullbacks, but its past recoveries came with a catch.

Of the 9 times the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has suffered a deep dip, 7 were followed by a positive return over the next twelve months. That history is front and center for any investor looking at the fund today, as it sits about 17.4% below its 52-week high and the temptation to buy the discount grows.

A dip can be a gift in a broad, diversified fund. In a concentrated, single-theme fund, it can be a trap. The question for an XOP owner is which kind of fund this has proven to be.

What A Rebound Has Looked Like

The fund’s own record offers some encouragement. Across those 9 past drops of 20% or more, the median return in the following year was +12%. That +12% represents a solid gain, not merely a breakeven. The path to that return saw a median peak gain within a year of a dip of +25%. Investors who bought into similar weakness during the pullbacks of December 2018 or August 2017 saw a history that, more often than not, rewarded their patience. But the past is not a blueprint, and the full story of those recoveries is more complicated.

The Cost Of Catching The Bottom

Buying a dip rarely means you have timed the absolute low. For XOP, the price of entry was often more pain first. The median worst further drawdown in the year after a dip was 8%. That is the additional decline a buyer typically had to sit through before the fund found its footing. While some past dips, like the one in April 2025, were part of this historical pattern of recovery, enduring another 8% drop after you have already bought into a significant decline requires conviction.

A Basket Of Energy, Not The Whole Market

Ultimately, whether this dip recovers depends on what is inside the fund. XOP is not the broader market. It holds 51 positions focused squarely on oil and gas exploration and production. Its five largest holdings, including names like CNX Resources (CNX) and Texas Pacific Land (TPL), make up 13.6% of the fund. This concentration in a single industry is what fuels both its sharp runs and its steep drops. A broad market fund recovers as the whole economy does; this fund recovers only if its specific corner of the energy sector does.

The fund’s history shows that buying a steep drop has paid off more often than it has failed. But it also shows the ride was rarely smooth, and the outcome was tied to the fortunes of a narrow slice of the market. The record is supportive, but the concentration means a buyer is counting on a rebound in one specific theme, and history shows they have often had to stomach more downside before seeing it.

Is This Dip A Gift Or A Trap?

Staring at the dip in XOP, you are weighing whether to buy more or wait it out. The history above is an honest place to start. We know what you are thinking, and it is an absolutely fair question.

Still, a dip-and-recovery record is only half the story. It tells you what tended to happen after past drops, not whether the fund is reasonably valued today or how it is holding up against its peers right now. Before adding to a position, it is worth seeing where it actually stands: our ETF Valuation and Performance Scorecard lines the major ETFs up side by side on valuation, returns, and risk, so the dip becomes one input rather than the whole decision.

If You Would Rather Choose Your Exposure

There is also a limit no dip chart can fix. An index fund has to hold whatever its index dictates, so a buyer can end up with money concentrated in a handful of the same names, whether or not they would have chosen them. Buying the dip does not change what is inside the basket.

If you would rather your exposure be chosen than inherited, our High Quality (HQ) Portfolio is built on a different idea: rule-based, multi-factor screening instead of index membership, with 30 names spread deliberately across different kinds of businesses and re-balanced on a schedule so it leans into quality while trimming what has run. It has a record of outpacing a benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000.