Should You Invest in the Fidelity MSCI Energy Index ETF (FENY)?
Launched on 10/21/2013, the Fidelity MSCI Energy Index ETF (FENY) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy – Broad segment of the U.S. equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
The fund is sponsored by Fidelity. It has amassed assets over $567.51 M, making it one of the larger ETFs attempting to match the performance of the Energy – Broad segment of the U.S. equity market. FENY seeks to match the performance of the MSCI USA IMI Energy Index before fees and expenses.
MSCI USA IMI Energy Index represents the performance of the energy sector in the U.S. equity market.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.08%, making it the least expensive product in the space.
It has a 12-month trailing dividend yield of 2.81%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector–about 100% of the portfolio.
Looking at individual holdings, Exxon Mobil Corp (XOM) accounts for about 21.22% of total assets, followed by Chevron Corp (CVX) and Schlumberger Ltd (SLB).
The top 10 holdings account for about 65% of total assets under management.
Performance and Risk
So far this year, FENY return is roughly 4.07%, and was up about 11.28% in the last one year (as of 04/27/2018). During this past 52-week period, the fund has traded between $17.05 and $21.59.
The ETF has a beta of 1.08 and standard deviation of 22.22% for the trailing three-year period, making it a high risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.
Fidelity MSCI Energy Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FENY is a good option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Energy ETF (VDE) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR Fund (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $4.35 B in assets, Energy Select Sector SPDR Fund has $18.86 B. VDE has an expense ratio of 0.10% and XLE charges 0.13%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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SPDR-EGY SELS (XLE): ETF Research Reports
FID-ENERGY (FENY): ETF Research Reports
VIPERS-ENERGY (VDE): ETF Research Reports
Schlumberger Limited (SLB): Free Stock Analysis Report
Chevron Corporation (CVX): Free Stock Analysis Report
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
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