Texas ETFs: Investing in the Lone Star Economy

Core Insights - Texas is increasingly recognized for its economic advantages, with a GDP of $2.77 trillion in 2024 and leading the nation by adding 132,500 jobs in 2025, making it the eighth largest economy globally, surpassing countries like Canada and South Korea [1][2] Economic Overview - Texas has a pro-business environment characterized by no personal or corporate income tax, a low-cost operating environment, and a significant presence of major employers, including 54 Fortune 500 companies and over 3.5 million small businesses [1] - The Texas Stock Exchange is set to launch trading in 2026, indicating the state's ambitions in capital markets [1] Texas ETF Landscape - Four ETFs currently target the Texas economy, including two diversified funds and two focused on energy [1] - The Texas Capital Texas Equity Index ETF (TXS) is the oldest Texas ETF, launched in July 2023, with $34 million in assets, and has a diversified portfolio with a 22% weight in energy [1] - The Texas Capital Texas Oil Index ETF (OILT) tracks companies involved in oil and gas extraction in Texas, with a unique weighting methodology based on production rather than market cap, and has seen a 29% increase this year [1] - The iShares Texas Equity ETF (TEXN), launched in June 2025, has a more energy-tilted portfolio with 38% in energy and the lowest expense ratio among the group at 20 basis points [1] - The Horizon Kinetics Texas ETF (TEXX), launched in 2026, is actively managed and focuses on companies benefiting from Texas's economic expansion, with over 50% of its holdings in the energy sector [1] Investment Implications - Texas ETFs provide a focused investment opportunity in one of the fastest-growing state economies in the U.S., appealing to investors looking for both broad equity exposure and specialized industry investments [2] - The size of the Texas economy positions it as a viable alternative to single-country ETFs, making Texas ETFs a complementary addition to a broader U.S. equity portfolio [2]