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Should You Invest in the Fidelity MSCI Energy Index ETF (FENY)?

Sector ETF report for FENY

By
This story originally appeared on Zacks

Designed to provide broad exposure to the Energy - Broad segment of the equity market, the Fidelity MSCI Energy Index ETF (FENY) is a passively managed exchange traded fund launched on 10/21/2013.

- Zacks

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Investor-friendly, sector ETFs provide many options 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 4, placing it in top 25%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $1.06 billion, making it one of the larger ETFs attempting to match the performance of the Energy - Broad segment of the 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.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 3.35%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that 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 Common Stock (XOM) accounts for about 20.15% of total assets, followed by Chevron Corp Common Stock Usd.75 (CVX) and Conocophillips Common Stock Usd.01 (COP).

The top 10 holdings account for about 64.93% of total assets under management.

Performance and Risk

So far this year, FENY has gained about 57.72%, and was up about 53.61% in the last one year (as of 12/08/2021). During this past 52-week period, the fund has traded between $10.04 and $16.32.

The ETF has a beta of 1.70 and standard deviation of 40.46% for the trailing three-year period, making it a high risk choice in the space. With about 98 holdings, it effectively diversifies company-specific risk.

Alternatives

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 ETF (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $5.88 billion in assets, Energy Select Sector SPDR ETF has $26.67 billion. VDE has an expense ratio of 0.10% and XLE charges 0.12%.

Bottom Line

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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Fidelity MSCI Energy Index ETF (FENY): ETF Research Reports

 

Chevron Corporation (CVX): Free Stock Analysis Report

 

Exxon Mobil Corporation (XOM): Free Stock Analysis Report

 

ConocoPhillips (COP): Free Stock Analysis Report

 

Energy Select Sector SPDR ETF (XLE): ETF Research Reports

 

Vanguard Energy ETF (VDE): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research