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

Zacks Equity Research
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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 equity market.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient 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 2, placing it in top 13%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $639.49 M, 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 2.76%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 (XOM) accounts for about 20.59% of total assets, followed by Chevron Corp (CVX) and Schlumberger Ltd (SLB).

The top 10 holdings account for about 62.81% of total assets under management.

Performance and Risk

The ETF has gained about 6.63% and was up about 18.71% so far this year and in the past one year (as of 08/03/2018), respectively. FENY has traded between $17.05 and $22.04 during this last 52-week period.

The ETF has a beta of 1.06 and standard deviation of 22.30% for the trailing three-year period, making it a high risk choice in the space. With about 137 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 sufficient 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 $4.41 B in assets, Energy Select Sector SPDR Fund has $19.04 B. VDE has an expense ratio of 0.10% and XLE charges 0.13%.

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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FID-ENERGY (FENY): ETF Research Reports
 
SPDR-EGY SELS (XLE): 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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