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

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Designed to provide broad exposure to the Energy - Broad segment of the equity market, the Fidelity MSCI Energy Index ETF (FENY - Free Report) 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. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $1.61 billion, 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.

The MSCI USA IMI Energy Index represents the performance of the energy sector in the U.S. equity market.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 3.45%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.

Looking at individual holdings, Exxon Mobil Corp Common Stock (XOM - Free Report) accounts for about 21.69% of total assets, followed by Chevron Corp Common Stock Usd.75 (CVX - Free Report) and Conocophillips Common Stock Usd.01 (COP - Free Report) .

The top 10 holdings account for about 66.36% of total assets under management.

Performance and Risk

So far this year, FENY has lost about -3.36%, and was up about 28.91% in the last one year (as of 02/20/2023). During this past 52-week period, the fund has traded between $18.04 and $25.83.

The ETF has a beta of 1.40 and standard deviation of 43.80% for the trailing three-year period, making it a high risk choice in the space. With about 125 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Energy Index ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FENY is an outstanding option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.10 billion in assets, Energy Select Sector SPDR ETF has $39.21 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.

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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