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If you're interested in broad exposure to the Utilities - Broad segment of the U.S. equity market, look no further than the Fidelity MSCI Utilities Index ETF (FUTY), a passively managed exchange traded fund launched on 10/21/2013.
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. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
The fund is sponsored by Fidelity. It has amassed assets over $297.83 M, making it one of the larger ETFs attempting to match the performance of the Utilities - Broad segment of the U.S. equity market. FUTY seeks to match the performance of the MSCI USA IMI Utilities Index before fees and expenses.
MSCI USA IMI Utilities Index represents the performance of the utilities sector in the U.S. equity market.
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 3.28%.
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 Utilities sector--about 99.60% of the portfolio.
Looking at individual holdings, Nextera Energy Inc (NEE) accounts for about 9.68% of total assets, followed by Duke Energy Corp (DUK) and Southern Co/the (SO).
The top 10 holdings account for about 49.79% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Utilities Index ETF has lost about -4.90% so far, and is down about -0.24% over the last 12 months (as of 05/22/2018). FUTY has traded between $31.11 and $36.94 in this past 52-week period.
The ETF has a beta of 0.20 and standard deviation of 13.88% for the trailing three-year period, making it a medium risk choice in the space. With about 76 holdings, it effectively diversifies company-specific risk.
Fidelity MSCI Utilities Index ETF sports a Zacks ETF Rank of 5 (Strong Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FUTY, then, is not the best option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. However, there are better ETFs in the space to consider.
Vanguard Utilities ETF (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR Fund (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $2.51 B in assets, Utilities Select Sector SPDR Fund has $6.60 B. VPU has an expense ratio of 0.10% and XLU charges 0.13%.
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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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Southern Company (The) (SO) : Free Stock Analysis Report
Duke Energy Corporation (DUK) : Free Stock Analysis Report
VIPERS-UTIL (VPU): ETF Research Reports
SPDR-UTIL SELS (XLU): ETF Research Reports
FID-UTILITY (FUTY): ETF Research Reports
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Zacks Investment Research