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

Zacks Equity Research
·3-min read

Looking for broad exposure to the Energy - Broad segment of the equity market? You should consider the Fidelity MSCI Energy Index ETF (FENY), a passively managed exchange traded fund launched on 10/21/2013.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $794.08 million, 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

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 Energy sector--about 100% of the portfolio.

Looking at individual holdings, Exxon Mobil Corp Common Stock (XOM) accounts for about 21.53% of total assets, followed by Chevron Corp Common Stock Usd.75 (CVX) and Conocophillips Common Stock Usd.01 (COP).

The top 10 holdings account for about 69.21% of total assets under management.

Performance and Risk

Year-to-date, the Fidelity MSCI Energy Index ETF has added roughly 30.42% so far, and was up about 11.12% over the last 12 months (as of 03/03/2021). FENY has traded between $6.20 and $13.58 in this past 52-week period.

The ETF has a beta of 1.82 and standard deviation of 39.06% for the trailing three-year period, making it a high risk choice in the space. With about 83 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Energy Index ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FENY, then, is not a suitable option for investors seeking exposure to the Energy ETFs segment of the market. However, 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 ETF (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $4.46 billion in assets, Energy Select Sector SPDR ETF has $20.86 billion. VDE has an expense ratio of 0.10% and XLE charges 0.12%.

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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