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

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 are also funds of convenience, offering many 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 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $427.19 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

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 3.51%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector--about 99.70% of the portfolio.

Looking at individual holdings, Exxon Mobil Corp (XOM) accounts for about 23.36% of total assets, followed by Chevron Corp Cdi (CVX) and Conocophillips (COP).

The top 10 holdings account for about 70.91% of total assets under management.

Performance and Risk

Year-to-date, the Fidelity MSCI Energy Index ETF has added roughly 5.83% so far, and is down about -12.62% over the last 12 months (as of 11/11/2019). FENY has traded between $14.63 and $18.79 in this past 52-week period.

The ETF has a beta of 1.19 and standard deviation of 19.86% for the trailing three-year period, making it a high risk choice in the space. With about 19 holdings, it has more concentrated exposure than peers.

Alternatives

Fidelity MSCI Energy 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. FENY, then, is not the best option for investors seeking exposure to the Energy ETFs segment of the market. Instead, there are better ETFs in the space to consider.

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 $3.13 B in assets, Energy Select Sector SPDR Fund has $10.79 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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Fidelity MSCI Energy Index ETF (FENY): ETF Research Reports
 
Energy Select Sector SPDR Fund (XLE): ETF Research Reports
 
Vanguard Energy ETF (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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