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.
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 15, placing it in bottom 6%.
The fund is sponsored by Fidelity. It has amassed assets over $1.02 billion, 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.
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 2.97%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 Common Stock Usd.01 (NEE) accounts for about 15.94% of total assets, followed by Duke Energy Corp Common Stock Usd.001 (DUK) and Southern Co/the Common Stock Usd5.0 (SO).
The top 10 holdings account for about 55.33% of total assets under management.
Performance and Risk
So far this year, FUTY has added about 5.40%, and is up about 26.55% in the last one year (as of 04/02/2021). During this past 52-week period, the fund has traded between $33.58 and $42.89.
The ETF has a beta of 0.37 and standard deviation of 24.77% for the trailing three-year period, making it a medium risk choice in the space. With about 69 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 sufficient 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 $4.49 billion in assets, Utilities Select Sector SPDR ETF has $12.01 billion. VPU has an expense ratio of 0.10% and XLU charges 0.12%.
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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Southern Company The (SO) : 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
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