Prediction: Fidelity’s Energy ETF Goes Nuclear in 2026

The Fidelity MSCI Energy Index ETF (NYSEARCA:FENY) started 2026 with a 2% gain in the first week. With $1.3 billion in assets and a 0.084% expense ratio, FENY offers pure-play exposure to U.S. energy companies, from oil majors like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) to midstream giants like Williams Companies (NYSE:WMB). The fund’s 196% return over five years demonstrates the sector’s recovery from pandemic lows, though recent performance has been measured with oil prices hovering in the mid-$50s per barrel.

The Trump Administration’s Venezuela Gambit

The most significant macro development for energy investors in 2026 is the Trump administration’s move to control Venezuelan oil production and sales. Energy Secretary Chris Wright announced this week that the U.S. will manage the flow and sale of Venezuela’s oil indefinitely, with revenues deposited into U.S.-controlled accounts before being released back to Venezuela for infrastructure investment. The administration aims to drive oil prices toward $50 per barrel, potentially adding 2 million barrels per day to global supply if Venezuela’s degraded infrastructure can be rehabilitated.

For FENY investors, this policy presents a double-edged sword. Lower oil prices would pressure the fund’s upstream producers, particularly XOM and CVX which together represent 38% of the portfolio. However, the administration’s pro-drilling agenda and plans to ease permitting for U.S. energy projects could offset Venezuela-related headwinds. Watch the weekly EIA Petroleum Status Report and monthly OPEC production data to track whether Venezuelan barrels actually materialize. If Venezuela’s output increases significantly over the next 12 months, expect pressure on FENY’s oil-weighted holdings. If infrastructure challenges delay the ramp-up, current supply dynamics may support steadier pricing.

Concentration Risk in Traditional Energy

Despite the “nuclear” framing, FENY remains overwhelmingly a traditional oil and gas play. The fund holds just 0.33% in Uranium Energy Corp (NYSE:UEC) and 0.23% in Centrus Energy (NYSE:LEU), totaling less than 0.6% nuclear exposure. While UEC surged 24% in the first week of 2026, this performance barely moves FENY’s needle given the tiny allocation. The real driver of returns will be the top 10 holdings at 61% of assets, particularly how XOM and CVX navigate a potentially oversupplied oil market.

Monitor FENY’s quarterly holdings reports and MSCI USA IMI Energy Index methodology updates to track compositional shifts. The fund’s 7% portfolio turnover suggests minimal trading activity, so don’t expect dramatic rebalancing toward nuclear stocks unless the underlying index methodology changes. The 3.07% dividend yield provides income cushion, but total returns will hinge on oil price stability and whether integrated majors can maintain profitability in a $50-60 per barrel environment.

Consider a Broader Alternative

Investors seeking similar energy exposure with greater diversification should examine the Vanguard Energy ETF (NYSEARCA:VDE). With $8.8 billion in assets and a 0.09% expense ratio, VDE holds 109 positions versus FENY’s more concentrated approach, providing deeper exposure to mid-cap energy names and oilfield services companies. VDE’s broader composition may offer better downside protection if the Trump administration’s Venezuela strategy succeeds in pressuring oil prices lower throughout 2026.

The Bottom Line

FENY’s 2026 performance will be determined primarily by how Trump’s Venezuela oil policy affects global crude prices and whether U.S. energy policy support can offset any resulting margin pressure on the fund’s dominant oil major holdings.