Top 10 Best Performing UK ETFs of the Last 3 Years

While our energy bills have been skyrocketing over the last few years, it’s reassuring to know that the big energy companies have been making a killing. Below are the best performing ETFs over the last 3 years, excluding the illiquid tiny ones that aren’t worth bothering with as a long-term investor. As you’ll see, it has been all about energy…

Best ETFs – 3 Year Performance

1. iShares S&P 500 Energy Sector UCITS ETF

As the name suggests, this ETF tracks energy companies in the S&P 500. These include businesses that are primarily involved in: the construction or provision of oil rigs, drilling equipment and other energy related service and equipment, companies engaged in the exploration, production, marketing, refining and/or transportation of oil and gas products.

• 3 Year Return – 144.44%
• Fee – 0.15%
• Size of fund – £697 million
• Top 5 holdings
  • Exxon Mobil – 26.52%
  • Chevron – 16.18%
  • ConocoPhillips – 8.90%
  • Schlumberger – 4.95%
  • EOG Resources – 4.60%

2. SPDR S&P US Energy Select Sector UCITS ETF

Tracks the performance of large energy companies in the S&P 500. Slightly different to the iShares in that it tracks the S&P Energy Select Sector Daily Capped 25/20 Index. The capping is to increase diversification of companies in the index, so it doesn’t come to be dominated by a handful of giants. Performance-wise it is almost identical to the iShares ETF above.

• 3 Year Return – 143.64%
• Fee – 0.15%
• Size of fund – £809 million
• Top 5 holdings
  • Exxon Mobil – 22.22%
  • Chevron – 17.21%
  • EOG Resources – 4.79%
  • Marathon Petroleum – 4.61%
  • ConocoPhillips – 4.53%

3. Invesco US Energy Sector UCITS ETF

As above, although it tracks a slightly different capped index, the S&P Select Sector Capped 20% Energy Index. So, very similar to the SPDR ETF, though a tiny bit cheaper.

• 3 Year Return – 143.03%
• Fee – 0.14%
• Size of fund – £57 million
• Top 5 holdings
  • Exxon Mobil – 18.60%
  • Chevron – 17.70%
  • ConocoPhillips – 10.00%
  • Schlumberger – 5.50%
  • EOG Resources – 5.10%

4. WisdomTree Brent Crude Oil ETC

Not strictly an ETF but rather an ETC, or Exchange-Traded Commodity. It is a synthetic instrument, tracking the price of Brent Crude futures contracts using fully funded collateralised swaps. WTF does that mean? A swap is an agreement between two parties to exchange something (financial assets, cash) over a period of time. “Fully funded collateralised” indicates that even if one party can’t meet their obligation, there is enough money or assets in backup to cover the swap. “Brent” oil is sourced in Europe, whilst WTI (below) is from the US.

• 3 Year Return – 142.40%
• Fee – 0.49%
• Size of fund – £1.2 billion

5. Xtrackers MSCI USA Energy UCITS ETF

Back to the S&P 500 energy sector. Xtrackers again follows a slightly different index, the MSCI USA Energy 20-35 Custom Index. Also a capped index, this one can hold one company at up to 35% with the rest limited to a max of 20%. Top 5 holdings basically the same as the iShares at number 1.

• 3 Year Return – 138.33%
• Fee – 0.12%
• Size of fund – £57 million
• Top 5 holdings
  • Exxon – 25.24%
  • Chevron – 15.60%
  • ConocoPhillips – 8.48%
  • Schlumberger – 4.68%
  • EOG Resources – 4.36%

6. iShares Oil & Gas Exploration & Production UCITS ETF

Spotted the theme yet? Another energy sector ETF, this one focused on oil exploration and production. This one, rather than focussing on just US companies, invests in the biggest oil companies globally and tracks the S&P Commodity Producers Oil & Gas Exploration & Production Index.

• 3 Year Return – 137.64%
• Fee – 0.55%
• Size of fund – £275 million
• Top 5 holdings
  • ConocoPhillips – 9.94%
  • EOG Resources – 9.76%
  • Canadian Natural Resources Ltd – 9.56%
  • Pioneer Natural Resources Ltd – 7.69%
  • Woodside Energy Group – 5.68%

7. WisdomTree WTI Crude Oil ETC

Another synthetic ETC. This one tracks the futures price of oil sourced in the US. See number 4 for more on how these synthetic ETCs work.

• 3 Year Return – 135.71%
• Fee – 0.49%
• Size of fund – £546 million

8. iShares MSCI World Energy Sector UCITS ETF

Back to the broader energy sector, and like the iShares ETF above it is a global ETF. It tracks the MSCI World Energy Index, which consists of energy companies from developed nations around the world. The usual US suspects like Exxon and Chevron dominate, with some UK and French flavour in the shape of Shell and TotalEnergies.

• 3 Year Return – 109.89%
• Fee – 0.25%
• Size of fund – £444 million
• Top 5 holdings
  • Exxon – 15.56%
  • Chevron – 9.68%
  • Shell – 7.89%
  • TotalEnergies – 5.50%
  • ConocoPhillips – 5.26%

9. Xtrackers MSCI World Energy UCITS ETF

Pretty much a carbon-copy of the iShares ETF above.

• 3 Year Return – 109.64%
• Fee – 0.25%
• Size of fund – £1.1 billion
• Top 5 holdings
  • Exxon – 15.74%
  • Chevron – 9.73%
  • Shell – 7.93%
  • TotalEnergies – 5.53%
  • ConocoPhillips – 5.29%

10. SPDR MSCI World Energy UCITS ETF

And again, tracks the MSCI World Energy Index. Top holding are a bit different but Exxon is still the biggest piece of the pie. Slightly more expensive, but really all three do the same thing.

• 3 Year Return – 108.90%
• Fee – 0.30%
• Size of fund – £452 million
• Top 5 holdings
  • Exxon – 15.44%
  • ConocoPhillips – 5.30%
  • EOG Resources – 2.72%
  • Enbridge – 2.52%
  • Pioneer Natural Resources – 2.06%

Global Energy Crisis

The 3-year leaderboard paints a clear picture of the key global economics dynamic in play since 2021. The global energy crisis kicked off shortly after the waning of the COVID pandemic, which caused all sorts of supply and demand imbalances.

Add to this the Russia/Ukraine war, OPEC supply restriction shenanigans and a bonkers climate, and you have the perfect environment for energy companies to get fat off their increased margins.

The US energy sector has been the big winner, as has the S&P 500 in general. Whilst the returns on S&P500 energy ETFs was the place to be to ride this wave, it’s always worth considering the better diversified global energy ETFs further down the list. Whilst the returns have been less, 3 years isn’t exactly “long term” and diversification reaps greater rewards the longer your time horizon.

Conclusion

If you compare this list to the best performing ETFs of 2023, you can see there is no overlap. Trends and cycles come and go – some are more persistent, as in the case of technology which we will see a lot more of in our 5-year performance roundup to come. The last few years have been all about energy prices, and whether that will continue is a speculation worth considering in your investment planning.

Performance data in GBP from justETF.