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Should You Invest in the Fidelity MSCI Utilities Index ETF (FUTY)?

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If you're interested in broad exposure to the Utilities - Broad segment of the equity market, look no further than the Fidelity MSCI Utilities Index ETF (FUTY - Free Report) , 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.

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 11, placing it in bottom 19%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $1.09 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.

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

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 3.39%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 Common Stock Usd.01 (NEE - Free Report) accounts for about 11.70% of total assets, followed by Southern Co/the Common Stock Usd5.0 (SO - Free Report) and Duke Energy Corp Common Stock Usd.001 (DUK - Free Report) .

The top 10 holdings account for about 51.94% of total assets under management.

Performance and Risk

The ETF has lost about -2.42% and is down about -0.89% so far this year and in the past one year (as of 03/04/2024), respectively. FUTY has traded between $36.18 and $45.15 during this last 52-week period.

The ETF has a beta of 0.58 and standard deviation of 17.85% for the trailing three-year period, making it a medium risk choice in the space. With about 71 holdings, it effectively diversifies company-specific risk.

Alternatives

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 - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.85 billion in assets, Utilities Select Sector SPDR ETF has $11.90 billion. VPU has an expense ratio of 0.10% and XLU charges 0.09%.

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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