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

Zacks Equity Research

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

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 8, placing it in top 50%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $909.36 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.

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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 2.76%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 11.03% of total assets, followed by Duke Energy Corp (DUK) and Dominion Energy Inc (D).

The top 10 holdings account for about 53.23% of total assets under management.

Performance and Risk

Year-to-date, the Fidelity MSCI Utilities Index ETF has added about 19.69% so far, and is up about 15.76% over the last 12 months (as of 11/14/2019). FUTY has traded between $33.93 and $42.60 in this past 52-week period.

The ETF has a beta of 0.19 and standard deviation of 12.42% for the trailing three-year period, making it a medium risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.

Alternatives

Fidelity MSCI Utilities 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, FUTY is a great option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

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 $4.21 B in assets, Utilities Select Sector SPDR Fund has $11.09 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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Fidelity MSCI Utilities Index ETF (FUTY): ETF Research Reports
 
Dominion Energy Inc. (D) : Free Stock Analysis Report
 
Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
 
Utilities Select Sector SPDR Fund (XLU): ETF Research Reports
 
Vanguard Utilities ETF (VPU): ETF Research Reports
 
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Zacks Investment Research