Launched on 10/21/2013, the Fidelity MSCI Utilities Index ETF (FUTY) is a passively managed exchange traded fund designed to provide a broad exposure to the Utilities - Broad segment of the equity market.
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. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Fidelity. It has amassed assets over $812.90 million, 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.
MSCI USA IMI Utilities Index represents the performance of the utilities sector in the U.S. equity market.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 3.36%.
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 99.50% of the portfolio.
Looking at individual holdings, Nextera Energy Inc (NEE) accounts for about 12.88% of total assets, followed by Dominion Energy Inc (D) and Duke Energy Corp (DUK).
The top 10 holdings account for about 55.34% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Utilities Index ETF has lost about -11.14% so far, and is down about -4.36% over the last 12 months (as of 07/07/2020). FUTY has traded between $29.08 and $46.21 in this past 52-week period.
The ETF has a beta of 0.40 and standard deviation of 23.95% 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.
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 ETF (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $3.82 billion in assets, Utilities Select Sector SPDR ETF has $11.25 billion. VPU has an expense ratio of 0.10% and XLU charges 0.13%.
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 ETF (XLU): ETF Research Reports
Vanguard Utilities ETF (VPU): ETF Research Reports
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