The fund tracks the MSCI USA IMI Energy 25/50 index and holds US-listed energy companies across the sector, weighted by market capitalization. It covers the entire energy value chain, from exploration and production (E&P) to refining, pipelines, and oilfield services.

It suits investors who want diversified exposure to the US energy sector, which is centered on crude oil and natural gas.

Fidelity launched the ETF in 2013, and it is managed passively by tracking an index.

The fund holds shares of US energy companies included in the MSCI USA IMI Energy 25/50 index, in proportion to their market capitalization. A 25/50 diversification rule is applied to limit concentration in individual stocks, and large integrated energy companies account for the top weightings.

• Lower cost burden than the energy category average
• About 100 holdings covering the entire energy value chain

Assets under management (AUM) stand at $2.1B, and the Expense Ratio is 0.08% per year.

Compared with similar ETFs such as XLE and VDE, its cost burden is on the lower side, and it holds more stocks than XLE, so it includes small and mid-sized energy companies as well.

The energy sector is highly correlated with international oil price movements and tends to deliver relatively strong performance when oil prices are rising. The earnings of exploration and production companies largely determine the direction of the sector as a whole.

Capital tends to flow into the energy sector when inflation and geopolitical supply uncertainty come to the fore. Conversely, outflow pressure can build amid worries about an economic slowdown or falling oil prices, so the sector is fairly sensitive to the macroeconomic environment.

Low costs and broad diversification across the energy sector are its strengths, but investors should watch out for oil price volatility and sector concentration risk.

Comparable products in the same energy sector category shown in the table include XLE, VDE, and IYE. XLE focuses on the energy constituents of the S&P 500 and therefore holds fewer stocks, while VDE is a broad energy ETF managed by Vanguard. IYE is managed by iShares and has somewhat higher fees. FXN applies an equal-weighting approach to ease the skew toward large caps, which differentiates its strategy. For more specific strategies within the energy sector, XOP, which specializes in exploration and production, and MLPX, which centers on liquefied natural gas and pipeline infrastructure, can also be compared.

These are the points to review before investing in FENY. Given the nature of the energy sector, sensitivity to oil prices and the macroeconomic environment is high, so it is important to define your investment goals and holding period clearly in advance.

Because of its structural nature as a single-sector energy exposure, the fund can suffer large losses if oil prices plunge, and during an economic recession, falling energy demand can weigh on the sector as a whole. Geopolitical risk can cause sharp short-term swings.

This is an ETF to consider when you want to diversify across the US energy sector at low cost. Differences from similar ETFs lie mainly in the expense ratio, the tracking index, and the range of holdings, so it is wise to compare products and choose the one that fits your investment goals.