FUTY: Improving Long-Term Growth Outlook But Expensive Valuation

Summary

• Fidelity MSCI Utilities Index ETF has outperformed the S&P 500 in 2024, due to macroeconomic uncertainty and expectations of a lower rate environment.
• Despite improving long-term growth due to AI-driven electricity demand, FUTY's growth outlook still lags behind the S&P 500 for 2025 and 2026.
• The Fund's valuation is currently rich, with a forward P/E ratio much higher than the historical average, suggesting caution.
• Investors should consider waiting for a pullback before initiating a position in FUTY, given its high valuation despite an improving growth outlook.

Justin Paget

Introduction

We last covered Fidelity MSCI Utilities Index ETF (NYSEARCA:FUTY) back in March 2023. At that time, we noted its fair valuation. We also pointed out that its long-term growth profile was likely weaker than the S&P 500 index. However, it has

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: This is not financial advice and that all financial investments carry risks. Investors are expected to seek financial advice from professionals before making any investment.