Designed to provide broad exposure to the Utilities - Broad segment of the equity market, the Fidelity MSCI Utilities Index ETF (FUTY) is a passively managed exchange traded fund launched on 10/21/2013.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options 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 6, placing it in top 38%.
The fund is sponsored by Fidelity. It has amassed assets over $1.05 B, making it one of the larger ETFs attempting to match the performance of the Utilities - Broad segment of the 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 2.62%.
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 11.88% of total assets, followed by Southern Co/the (SO) and Duke Energy Corp (DUK).
The top 10 holdings account for about 53.96% of total assets under management.
Performance and Risk
The ETF has added about 7.68% and it's up approximately 27.57% so far this year and in the past one year (as of 02/14/2020), respectively. FUTY has traded between $36.76 and $45.55 during this last 52-week period.
The ETF has a beta of 0.19 and standard deviation of 12.05% for the trailing three-year period, making it a medium risk choice in the space. With about 70 holdings, it effectively diversifies company-specific risk.
Fidelity MSCI Utilities 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, FUTY is a good option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Utilities ETF (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.75 B in assets, Utilities Select Sector SPDR ETF has $12.05 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Fidelity MSCI Utilities Index ETF (FUTY): ETF Research Reports
Southern Company (The) (SO) : Free Stock Analysis Report
Duke Energy Corporation (DUK) : Free Stock Analysis Report
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
Vanguard Utilities ETF (VPU): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research