Should You Invest in the Fidelity MSCI Utilities Index ETF (FUTY)?
The Fidelity MSCI Utilities Index ETF (FUTY) was launched on 10/21/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Broad segment of the U.S. 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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by Fidelity. It has amassed assets over $282.10 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.
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 3.22%.
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 Utilities sector--about 99.70% of the portfolio.
Looking at individual holdings, Nextera Energy Inc (NEE) accounts for about 9.85% of total assets, followed by Duke Energy Corp (DUK) and Dominion Energy Inc (D).
The top 10 holdings account for about 50.61% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Utilities Index ETF has lost about -3.08% so far, and is up about 1.96% over the last 12 months (as of 04/06/2018). 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 13.93% 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.
Alternatives
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 a suitable option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. Instead, 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 $2.56 B in assets, Utilities Select Sector SPDR Fund has $6.96 B. VPU has an expense ratio of 0.10% and XLU 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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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Duke Energy Corporation (DUK) : Free Stock Analysis Report
Dominion Energy Inc. (D) : 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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