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

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The Fidelity MSCI Utilities Index ETF (FUTY) was launched on 10/21/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Broad segment of the equity market.

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.

Additionally, sector ETFs offer convenient 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 5, placing it in top 31%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $896.54 M, making it one of the average sized 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.

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 2.65%.

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 99.70% of the portfolio.

Looking at individual holdings, Nextera Energy Inc (NEE) accounts for about 10.73% of total assets, followed by Duke Energy Corp (DUK) and Dominion Energy Inc (D - Free Report) .

The top 10 holdings account for about 52.77% of total assets under management.

Performance and Risk

So far this year, FUTY has added roughly 24.34%, and was up about 25.27% in the last one year (as of 10/01/2019). During this past 52-week period, the fund has traded between $33.93 and $42.60.

The ETF has a beta of 0.21 and standard deviation of 12.82% 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.

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 reasonable 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 Fund (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.24 B in assets, Utilities Select Sector SPDR Fund has $11.30 B. VPU has an expense ratio of 0.10% and XLU 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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