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

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

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 7, placing it in top 44%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $877.14 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

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 3.78%.

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.

Looking at individual holdings, Exxon Mobil Corp Common Stock accounts for about 21.92% of total assets, followed by Chevron Corp Common Stock Usd.75 (XOM) and Conocophillips Common Stock Usd.01 (CVX).

The top 10 holdings account for about 68.06% of total assets under management.

Performance and Risk

The ETF return is roughly 30.83% so far this year and was up about 64.14% in the last one year (as of 04/16/2021). In that past 52-week period, it has traded between $7.37 and $14.52.

The ETF has a beta of 1.82 and standard deviation of 39.23% for the trailing three-year period, making it a high risk choice in the space. With about 84 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 great choice 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 $4.56 billion in assets, Energy Select Sector SPDR ETF has $22.35 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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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Energy Select Sector SPDR ETF (XLE): ETF Research Reports
 
Vanguard Energy ETF (VDE): ETF Research Reports
 
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