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

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·3 min read
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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.

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 8, placing it in top 50%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $876.01 million, 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 3.65%.

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 21.51% 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 67.19% of total assets under management.

Performance and Risk

The ETF has added about 38.57% and it's up approximately 67.12% so far this year and in the past one year (as of 09/16/2021), respectively. FENY has traded between $7.37 and $15.37 during this last 52-week period.

The ETF has a beta of 1.81 and standard deviation of 40.31% for the trailing three-year period, making it a high risk choice in the space. With about 100 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 reasonable 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 $5.12 billion in assets, Energy Select Sector SPDR ETF has $22.97 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
 
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Zacks Investment Research