Should You Invest in the Fidelity MSCI Energy Index ETF (FENY)?
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 U.S. equity market.
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.
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 $589.54 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
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 2.73%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 20.20% of total assets, followed by Chevron Corp (CVX) and Schlumberger Ltd (SLB).
The top 10 holdings account for about 63.20% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Energy Index ETF return is roughly 7.11% so far, and was up about 18.29% over the last 12 months (as of 06/13/2018). FENY has traded between $17.05 and $22.04 in this past 52-week period.
The ETF has a beta of 1.07 and standard deviation of 22.37% for the trailing three-year period, making it a high risk choice in the space. With about 139 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 Fund (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $4.48 B in assets, Energy Select Sector SPDR Fund has $19.33 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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