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Proprietary Data Insights Financial Pros Top Energy ETF Searches In The Last Month
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Inflation protection |
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A Cheap Way to Play The Energy Boom |
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During periods of inflation, investors will flock toward hard assets. One of the best inflationary assets isn’t gold or bitcoin, but oil. While the overall stock market is down double-digits in 2022, stocks like Exxon Mobil (XOM) are up 53% year-to-date. However, picking individual energy stocks can be tricky for investors. Luckily there is an easier way to gain exposure via ETF’s. Most investors are familiar with the top searched ETF by financial pros, the SPDR XLE. Today we’ll be looking at the Fidelity MSCI Energy Index ETF (FENY), the number two search. It’s far less popular amongst retail investors. Yet, it’s seen remarkable interest amongst financial pros. Check out our analysis below…
Fidelity MSCI Energy Index ETF (FENY) tries to mimic the performance of the MSCI USA IMI Energy Index. It invests at least 80% of assets in securities included in the fund’s underlying index. FENY provides investors with an easy way to access the energy sector in the U.S. equity market. Here are some more details about the companies in the FENY portfolio:
The top three holdings in FENY make up nearly 45% of the ETF’s weighting. They are Exxon Mobil Corp (XOM), Chevron (CVX), and ConocoPhillips (COP). That makes it a bit skewed in its exposure to the biggest names out there. Here are the top ten holdings and their weighting: If you invested $10,000 in FENY 5 years ago, it would have returned 49.71%, or $14,971. FENY is up 44.64% year-to-date.
However, an investment in a more diversified ETF, like the SPDR S&P 500 ETF(SPY) five years ago, would have brought back 75.7%. Trading FENY FENY is an actively traded ETF, with an average daily volume of 1.28 million shares. Furthermore, traders can choose to play FENY via options if they desire. Investing In FENY Costs are the first thing you want to pay attention to before investing in an ETF. FENY charges a net expense ratio of 0.08%, which is incredibly low, and a common feature of Fidelity funds. Cash flow in the form of dividends is always attractive to investors. FENY pays an annual dividend of $0.66, or a yield of 3.08%, which is quite healthy and much better than the S&P 500. Alternatives To FENY Investors have several options if they want to gain exposure to energy via the ETF market. T The largest energy ETF is the Energy Select Sector SPDR Fund (XLE). It charges an expense ratio of 0.10%. It’s up 45.5% year-to-date and has returned 17.15% over the last three years. The ETF consists mainly of oil and gas stocks. The main holdings of the ETF are Exxon Mobil (XOM), Chevron (CVX), and ConocoPhillips(COP). Like FENY, the XLE is skewed towards the large companies in its portfolio. It has an annual dividend of 3.58%.On the downside, XLE is priced at $78, while FENY is priced at $21. The Vanguard Energy ETF (VDE) is the second largest energy ETF. It charges an expense ratio of 0.10%. The majority of its holdings, 97.55%, are in oil and gas stocks. The main holdings of the ETF are Exxon Mobil (XOM), Chevron (CVX), and ConocoPhillips(COP). It pays an annual dividend of 3.34% and has returned over 63% in the last three years. However, at $110 a share, it’s even more expensive than XLE and FENY. An alternative that focuses on midstream operations is the Alerian MLP ETF (AMLP), a massive ETF with $6.6 billion in assets under management. It primarily invests in energy infrastructure MLPs with a focus on cash flow and profit from the volume of energy it transports. The majority of the stocks in the portfolio are industrial services and energy minerals. The top three holdings in AMLP are Magellan Midstream Partners (MMP), Enterprise Products Partners (EPD), and MPLX L.P. (MPLX). Over the last three years, it has returned 16%. Meanwhile, it pays out an annual dividend yield of 9.19%. However, the dividend changes based on the company’s profitability for the most recent month or quarter. Our Opinion 9/10 At approximately $21 per share, FENY is one of the cheapest energy ETFs for investors. It’s right on par with XLE and VDE in terms of performance. We believe energy will continue to outperform the overall market with inflation running hot and geopolitical tensions elevated. If you’re looking for exposure to the energy sector, we like FENY as an option and believe it is a strong investment for the next year or so. |
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