FAAR vs. XLE
FAAR (First Trust Alternative Absolute Return Strategy ETF) and XLE (State Street Energy Select Sector SPDR ETF) are both exchange-traded funds - FAAR is a Commodities fund actively managed by First Trust, while XLE is a Energy Equities fund tracking the Energy Select Sector Index. FAAR is actively managed, while XLE is passively managed. Over the past 10 years, FAAR returned 4.91%/yr vs 9.91%/yr for XLE. At a 0.32 correlation, their price movements are largely independent. FAAR charges 0.95%/yr vs 0.08%/yr for XLE.
Performance
FAAR vs. XLE - Performance Comparison
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Returns By Period
In the year-to-date period, FAAR achieves a 22.65% return, which is significantly lower than XLE's 29.56% return. Over the past 10 years, FAAR has underperformed XLE with an annualized return of 4.91%, while XLE has yielded a comparatively higher 9.91% annualized return.
FAAR
- 1D
- -0.36%
- 1M
- -3.07%
- YTD
- 22.65%
- 6M
- 22.23%
- 1Y
- 29.62%
- 3Y*
- 11.36%
- 5Y*
- 7.51%
- 10Y*
- 4.91%
XLE
- 1D
- 0.75%
- 1M
- -3.18%
- YTD
- 29.56%
- 6M
- 28.37%
- 1Y
- 34.84%
- 3Y*
- 16.18%
- 5Y*
- 20.12%
- 10Y*
- 9.91%
FAAR vs. XLE - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
FAAR First Trust Alternative Absolute Return Strategy ETF | 22.65% | 8.07% | 5.97% | -5.63% | 10.15% | 12.34% | 8.60% | -1.28% | -9.17% | 5.00% |
XLE State Street Energy Select Sector SPDR ETF | 29.56% | 7.88% | 5.56% | -0.63% | 64.32% | 53.28% | -32.67% | 11.74% | -18.22% | -0.89% |
Correlation
The correlation between FAAR and XLE is 0.54, which is moderate. They share some common price drivers but move independently often enough to provide real diversification benefit when combined.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.54 |
Correlation (3Y) Calculated over the trailing 3-year period | 0.37 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.39 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.32 |
Correlation (All Time) Calculated using the full available price history since May 23, 2016 | 0.32 |
Over the past year, FAAR and XLE have become more correlated (0.54) than their long-term average of 0.32, meaning their price movements have been converging.
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Return for Risk
FAAR vs. XLE — Risk / Return Rank
FAAR
XLE
FAAR vs. XLE - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for First Trust Alternative Absolute Return Strategy ETF (FAAR) and State Street Energy Select Sector SPDR ETF (XLE). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.
| FAAR | XLE | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | +0.62 | ||
| Sortino ratioReturn per unit of downside risk | +1.07 | ||
| Omega ratioGain probability vs. loss probability | 1.42 | 1.30 | +0.12 |
| Calmar ratioReturn relative to maximum drawdown | 6.79 | 3.10 | +3.69 |
| Martin ratioReturn relative to average drawdown | 18.23 | 8.63 | +9.60 |
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Drawdowns
FAAR vs. XLE - Drawdown Comparison
The maximum FAAR drawdown since its inception was -18.03%, smaller than the maximum XLE drawdown of -71.26%. Use the drawdown chart below to compare losses from any high point for FAAR and XLE.
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Drawdown Indicators
| FAAR | XLE | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -18.03% | -71.26% | +53.23% |
Max Drawdown (1Y)Largest decline over 1 year | -4.85% | -12.05% | +7.20% |
Max Drawdown (3Y)Largest decline over 3 years | -11.54% | -20.14% | +8.60% |
Max Drawdown (5Y)Largest decline over 5 years | -18.03% | -26.04% | +8.01% |
Max Drawdown (10Y)Largest decline over 10 years | -18.03% | -66.81% | +48.78% |
Current DrawdownCurrent decline from peak | -3.52% | -8.01% | +4.49% |
Average DrawdownAverage peak-to-trough decline | -7.83% | -17.97% | +10.14% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 1.80% | 4.32% | -2.52% |
Volatility
FAAR vs. XLE - Volatility Comparison
The current volatility for First Trust Alternative Absolute Return Strategy ETF (FAAR) is 2.28%, while State Street Energy Select Sector SPDR ETF (XLE) has a volatility of 7.26%. This indicates that FAAR experiences smaller price fluctuations and is considered to be less risky than XLE based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| FAAR | XLE | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 2.28% | 7.26% | -4.98% |
Volatility (6M)Calculated over the trailing 6-month period | 9.69% | 16.79% | -7.10% |
Volatility (1Y)Calculated over the trailing 1-year period | 13.49% | 20.57% | -7.08% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 13.02% | 26.05% | -13.03% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 11.52% | 29.58% | -18.06% |
FAAR vs. XLE - Expense Ratio Comparison
FAAR has a 0.95% expense ratio, which is higher than XLE's 0.08% expense ratio.
Dividends
FAAR vs. XLE - Dividend Comparison
FAAR's dividend yield for the trailing twelve months is around 9.38%, more than XLE's 2.59% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
FAAR First Trust Alternative Absolute Return Strategy ETF | 9.38% | 11.63% | 3.45% | 3.20% | 5.82% | 6.49% | 3.05% | 1.02% | 0.58% | 2.83% | 0.00% | 0.00% |
XLE State Street Energy Select Sector SPDR ETF | 2.59% | 3.28% | 3.36% | 3.55% | 3.68% | 4.21% | 5.62% | 6.72% | 3.54% | 3.03% | 2.26% | 3.39% |
Frequently Asked Questions
FAAR and XLE have a correlation of 0.54, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.
XLE has higher volatility (7.26%) compared to FAAR (2.28%). In terms of maximum drawdown, FAAR dropped -18.03% vs XLE's -71.26%.
On 10-year performance, XLE leads with 9.91% vs 4.91% for FAAR. On fees, XLE is cheaper at 0.08% per year. On volatility, FAAR has been the lower-risk option at 2.28%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, XLE has performed better with a 9.91% return vs 4.91%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
XLE is cheaper with a 0.08% expense ratio, compared with 0.95% for FAAR.
FAAR has the higher dividend yield at 9.38%, compared with 2.59% for XLE.
FAAR is categorized as Commodities, while XLE is Energy Equities. They also come from different issuers: First Trust and State Street. Their fees differ too: 0.95% for FAAR and 0.08% for XLE.
FAAR currently has the higher Sharpe Ratio (2.44 vs 1.82), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.
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