Dj Chevron Corp. Stock Falls Tuesday, Underperforms Market

If you're interested in broad exposure to the Energy - Broad segment of the equity market, look no further than the Fidelity MSCI Energy Index ETF (FENY), a passively managed exchange traded fund launched on 10/21/2013.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $1.63 billion, making it one of the larger ETFs attempting to match the performance of the Energy - Broad segment of the equity market. FENY seeks to match the performance of the MSCI USA IMI Energy Index before fees and expenses.

The MSCI USA IMI Energy 25/50 Index represents the performance of the energy sector in the U.S. equity market.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 2.94%.

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 Energy sector--about 99.90% of the portfolio.

Looking at individual holdings, Exxon Mobil Corp Common Stock (XOM) accounts for about 22.92% of total assets, followed by Chevron Corp Common Stock Usd.75 (CVX) and Conocophillips Common Stock Usd.01 (COP).

The top 10 holdings account for about 64.04% of total assets under management.

Performance and Risk

The ETF has gained about 15.47% and is up about 16.54% so far this year and in the past one year (as of 11/12/2024), respectively. FENY has traded between $21.97 and $26.87 during this last 52-week period.

The ETF has a beta of 1.22 and standard deviation of 27.21% for the trailing three-year period, making it a high risk choice in the space. With about 112 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Energy 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, FENY is an outstanding option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Energy ETF (VDE) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.21 billion in assets, Energy Select Sector SPDR ETF has $37.62 billion. VDE has an expense ratio of 0.10% and XLE charges 0.09%.

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.

Zacks Investment Research

The Invesco Dow Jones Industrial Average Dividend ETF (DJD) was launched on 12/16/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Invesco. DJD has been able to amass assets over $323.82 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Dow Jones Industrial Average Yield Weighted index.

The Dow Jones Industrial Average Yield Weighted Index provides exposure to high-yielding equity securities in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.

DJD's 12-month trailing dividend yield is 2.30%.

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.

For DJD, it has heaviest allocation in the Financials sector --about 14.80% of the portfolio --while Healthcare and Information Technology round out the top three.

Taking into account individual holdings, Verizon Communications Inc (VZ) accounts for about 10.05% of the fund's total assets, followed by Dow Inc (DOW) and Chevron Corp (CVX).

Its top 10 holdings account for approximately 58.51% of DJD's total assets under management.

Performance and Risk

The ETF return is roughly 15.77% and is up about 29.12% so far this year and in the past one year (as of 11/12/2024), respectively. DJD has traded between $41.52 and $53.28 during this last 52-week period.

The fund has a beta of 0.82 and standard deviation of 13.87% for the trailing three-year period. With about 28 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dow Jones Industrial Average Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $567.09 billion in assets, SPDR S&P 500 ETF has $627 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.

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.

Zacks Investment Research

Energy stocks were higher late Monday afternoon, with the NYSE Energy Sector Index up 0.4% and the Energy Select Sector SPDR Fund (XLE) rising 0.5%.

The Philadelphia Oil Service Sector index climbed 2%, and the Dow Jones US Utilities index was up 0.4%.

Front-month West Texas Intermediate crude oil fell 3.1% to $68.18 a barrel while the global benchmark Brent crude contract dropped 2.6% to $71.96 a barrel. Henry Hub natural gas futures jumped 10.2% to $2.94 per 1 million BTU.

In corporate news, Hawaiian Electric Industries shares were falling 6%. The company reported Q3 non-GAAP net income late Friday of $0.46 per diluted share, down from $0.56 a year earlier. Two analysts polled by Capital IQ expected $0.53.

TXNM Energy shares added 1.4%. The company's subsidiary Public Service Company of New Mexico said Monday it has agreed to join the California Independent System Operator Extended Day-Ahead Market.

NuScale Power shares fell 2% in recent trading after the company announced a $200 million equity offering program Friday.

Chevron has started redeploying personnel and restoring production at its Gulf of Mexico platforms that were shut down due to Hurricane Rafael, a company spokesperson told MT Newswires in an email Monday, confirming a media report. Chevron shares were easing 0.3%.

Energy stocks were higher Monday afternoon, with the NYSE Energy Sector Index up 0.3% and the Energy Select Sector SPDR Fund (XLE) adding 0.4%.

The Philadelphia Oil Service Sector index climbed 1.6%, and the Dow Jones US Utilities index was rising 0.4%.

Front-month West Texas Intermediate crude oil was declining 3.1% to $68.17 a barrel while the global benchmark Brent crude contract was dropping 2.8% to $71.83 a barrel. Henry Hub natural gas futures jumped nearly 10% to $2.93 per 1 million BTU.

In corporate news, NuScale Power shares tumbled 4.3% in recent trading after the company announced a $200 million equity offering program Friday.

Chevron has started redeploying personnel and restoring production at its Gulf of Mexico platforms that were shut down due to Hurricane Rafael, a company spokesperson told MT Newswires in an email Monday, confirming a media report. Chevron shares were easing 0.3%.

Houston American Energy said Monday it has appointed Peter Longo as chief executive and president, effective immediately, and closed a roughly $2.5 million private placement. Its shares were 0.7% lower.