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

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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.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $561.19 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

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 2.48%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 20.60% of total assets, followed by Chevron Corp (CVX) and Conocophillips (COP).

The top 10 holdings account for about 63.65% of total assets under management.

Performance and Risk

The ETF has added roughly 3.48% so far this year and it's up approximately 10.33% in the last one year (as of 10/12/2018). In that past 52-week period, it has traded between $18.29 and $22.04.

The ETF has a beta of 1.03 and standard deviation of 20.94% for the trailing three-year period, making it a high risk choice in the space. With about 138 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 $4.15 B in assets, Energy Select Sector SPDR Fund has $17.38 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
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
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