State Street Fossil Fuel ETF Outperforms Solar and Clean Energy

Investment analysis shows a performance divide between traditional fossil fuel assets and renewable energy funds. State Street Corporation's Energy Select Sector SPDR ETF (XLE), which focuses on large-cap U.S. companies like ExxonMobil and Chevron, has outperformed both the Invesco Solar ETF (TAN) and the iShares Global Clean Energy ETF (ICLN) in three- and five-year windows. As of July 23, 2026, XLE managed $39.5 billion in assets and posted a one-year return of 41.00%.

High global oil prices linked to the Iran war and rising interest rates—which have increased financing costs for solar projects—contributed to the strength of traditional energy. XLE maintains a low expense ratio of 0.08% and a dividend yield of 2.60%, offering lower volatility than its renewable counterparts.

In contrast, renewable funds show stronger long-term growth over a ten-year horizon. The Invesco Solar ETF reported 11.8% annualized returns and the iShares Global Clean Energy ETF reported 10.7%, both surpassing XLE's 8.9% over the same period. However, these funds carry higher expense ratios, with TAN at 0.7% and ICLN at 0.39%. Lazard noted that solar remains the cheapest way to produce electricity on a utility scale, despite the current volatility and financing challenges.