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

Zacks Equity Research
Merck (MRK) closed the most recent trading day at $72.35, moving +0.19% from the previous trading session.

Looking for broad exposure to the Energy - Broad segment of the U.S. equity market? You should consider the Fidelity MSCI Energy Index ETF (FENY), a passively managed exchange traded fund launched on 10/21/2013.

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 3, placing it in top 19%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $593.95 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.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 2.71%.

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 (XOM) accounts for about 19.90% of total assets, followed by Chevron Corp (CVX) and Schlumberger Ltd (SLB).

The top 10 holdings account for about 63.90% of total assets under management.

Performance and Risk

So far this year, FENY has gained about 7.91%, and is up roughly 16.03% in the last one year (as of 05/16/2018). During this past 52-week period, the fund has traded between $17.05 and $21.59.

The ETF has a beta of 1.06 and standard deviation of 22.23% for the trailing three-year period, making it a high risk choice in the space. With about 135 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 Fund (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $4.51 B in assets, Energy Select Sector SPDR Fund has $19.47 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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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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