Designed to provide broad exposure to the Utilities - Broad segment of the equity market, the Fidelity MSCI Utilities Index ETF (
FUTY Quick Quote FUTY - Free Report) 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. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.
The fund is sponsored by Fidelity. It has amassed assets over $1.02 billion, 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.
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 3.10%.
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 99.50% of the portfolio.
Looking at individual holdings, Nextera Energy Inc Common Stock Usd.01 (
NEE Quick Quote NEE - Free Report) accounts for about 15.94% of total assets, followed by Duke Energy Corp Common Stock Usd.001 ( DUK Quick Quote DUK - Free Report) and Southern Co/the Common Stock Usd5.0 ( SO Quick Quote SO - Free Report) .
The top 10 holdings account for about 55.33% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Utilities Index ETF has added roughly 1.34% so far, and is down about -0.08% over the last 12 months (as of 03/11/2021). FUTY has traded between $29.08 and $42.89 in this past 52-week period.
The ETF has a beta of 0.37 and standard deviation of 24.76% for the trailing three-year period, making it a medium risk choice in the space. With about 69 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 sufficient 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 Quick Quote VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF ( XLU Quick Quote XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.33 billion in assets, Utilities Select Sector SPDR ETF has $11.70 billion. VPU has an expense ratio of 0.10% and XLU charges 0.12%. Bottom Line
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