The energy sector has been on fire all year long. Oil prices continue to rise and there’s seemingly no end in sight. One way to profit in the energy sector is to buy the Exchange Traded Fund XLE.

Before I continue, I must note that as of this writing (July 12, 2007) XLE is in my portfolio.

Energy Select Sector SPDR Fund (Symbol: XLE) is traded on AMEX and it closed at $73.23 on Wednesday.

The Fund has $4.2 billion in assets, and it’s been on a tear since March—where it was around $55. It gives investors a low-cost vehicle for securing a portfolio of equity securities of companies in the energy sector.

You’re probably familiar with many holdings of XLE, which include:

1. Exxon Mobil Corp (Symbol: XOM) – 21.5%
2. Chevron (Symbol: CVX) – 12.8%
3. ConocoPhillips (Symbol: COP) – 10%
4. Schlumberger Ltd (Symbol: SLB) – 4.6%
5. Valero Energy Corp (Symbol: VLO) – 3.7%

XLE has 99.6% of its holdings in Oil & Gas, but it also has 2.1% in Basic Materials and 1.2% in Utilities. It’s up 28.50% on the year, with most of that (15.20%) coming in the past three months.

This Fund pays a dividend. The yield is 1.11%.

If you’re looking to invest in the energy sector, but you can’t decide on what company to invest in, take a look at XLE. You’ll get a basket of strong energy companies in a bullish sector.