Fidelity Select Energy Portfolio (FSENX): A High-Conviction Energy Play in a Transformed Market

The energy sector is at a crossroads. Geopolitical tensions, from the Middle East to Ukraine, have pushed oil prices into a volatile $64–$79 per barrel range in Q2 2025, creating a tailwind for energy producers [1]. Meanwhile, the energy transition—once a distant promise—has become a force reshaping capital flows, with over 70% of energy executives now allocating resources to both fossil fuels and renewable assets [2]. In this transformed landscape, the Fidelity Select Energy Portfolio (FSENX) has emerged as a compelling case study in strategic positioning.

Outperformance in a Volatile Quarter

FSENX’s Q2 2025 performance of -4.01% may seem unimpressive at first glance, but it outpaced the MSCI U.S. IMI Energy 25/50 Index and held its ground against a broader market that saw the S&P 500 outperform [3]. Year-to-date, the fund delivered a 7.44% total return, significantly outperforming the 5.07% return of the ETF benchmark FENY [4]. This resilience stems from its non-diversified strategy, which concentrates on energy-related companies—both traditional and emerging—allowing it to capitalize on sector-specific tailwinds [5].

A Decade of Conviction

Over the past decade, FSENX has compounded at a 6.63% annualized rate, nearly mirroring FENY’s 6.66% [6]. But the fund’s true strength lies in its 5-year annualized return of 26.5% as of August 2025 [7], a figure that dwarfs its category average. This outperformance is not accidental. Maurice FitzMaurice, the fund’s lead manager since 2020, has built a career on value-oriented research and a deep understanding of energy’s dual narrative: the enduring demand for oil and gas and the accelerating shift toward renewables [8]. FitzMaurice’s team, which also manages the Fidelity Advisor Energy Fund, has consistently emphasized operational flexibility and strong balance sheets—traits that have served investors well in a sector prone to boom-and-bust cycles [9].

Navigating the Energy Transition

The energy transition remains a double-edged sword. While 70% of executives are ramping up investments in renewables, geopolitical leaders are simultaneously pushing for decoupling in key sectors, complicating the path to net-zero [10]. FSENX’s portfolio reflects this duality. Its overweight position in energy equipment and services—driven by surging demand for oilfield expertise—has proven lucrative as U.S. shale producers ramp up output [11]. At the same time, the fund’s exposure to midstream infrastructure and localized supply chains offers a hedge against macroeconomic shocks [12]. This balanced approach allows FSENX to thrive in a world where energy demand remains robust, even as the sector evolves.

Cost Efficiency and Long-Term Appeal

With an expense ratio of 0.65% as of April 2025 [13], FSENX strikes a reasonable balance between active management and cost efficiency. While higher than the 0.08% of FENY, the fund’s active strategy—rooted in fundamental analysis of companies’ financial health and industry positioning—justifies the premium for investors seeking alpha [14]. The fund’s low expense ratio, combined with its strong returns, underscores its appeal as a long-term vehicle for those betting on energy’s next chapter.

Risks and Rewards

No energy play is without risk. FSENX’s focus on a single sector exposes it to volatility, and the energy transition’s pace remains uncertain. However, its strategic diversification—spanning traditional producers, oilfield services, and infrastructure—mitigates some of these risks. As FitzMaurice has noted, the key to success lies in identifying companies that can adapt to both the “old energy” and “new energy” paradigms [15].

Conclusion

FSENX is more than a fund; it’s a microcosm of the energy sector’s transformation. By leveraging FitzMaurice’s expertise, a disciplined investment strategy, and a nuanced view of macro trends, the fund has positioned itself to outperform in a world where energy demand and geopolitical risks remain intertwined. For investors with a high-conviction, long-term outlook, FSENX offers a compelling way to navigate the uncertainties of the 2020s.

Source:
[1] Energy Sector Volatility: Geopolitical Risk as a Tailwind for Energy Stocks [https://www.ainvest.com/news/energy-sector-volatility-geopolitical-risk-tailwind-energy-stocks-2508/]
[2] Top geopolitical risks 2025: Energy insights [https://kpmg.com/xx/en/our-insights/risk-and-regulation/top-risks-forecast/energy.html]
[3] Fidelity ® Select Energy Portfolio: Quarterly Fund Review [https://fundresearch.fidelity.com/mutual-funds/analysis/316390103]
[4] FSENX vs. FENY — Investment Comparison Tool [https://portfolioslab.com/tools/stock-comparison/FSENX/FENY]
[5] Fidelity Select Energy Portfolio (FSENX) Performance History [https://finance.yahoo.com/quote/FSENX/performance/]
[6] FSENX: Fidelity Select Energy - Fund Performance [https://www.dividend.com/funds/fsenx-fidelity-select-energy/]
[7] FSENX: Fidelity Select Energy - Fund Performance [https://www.dividend.com/funds/fsenx-fidelity-select-energy/]
[8] Maurice J. FitzMaurice - Energy Fund Manager [https://www.fidelity.com/sector-investing/energy/fund-manager]
[9] FSENX Summary [https://www.schwab.wallst.com/Prospect/Research/mutualfunds/Summary.asp?symbol=fsenx]
[10] Top geopolitical risks 2025: Energy insights [https://kpmg.com/xx/en/our-insights/risk-and-regulation/top-risks-forecast/energy.html]
[11] Energy Sector Volatility Amid Geopolitical Uncertainty and Rate-Cut Expectations [https://www.ainvest.com/news/energy-sector-volatility-geopolitical-uncertainty-rate-cut-expectations-strategic-positioning-resilience-opportunity-2508/]
[12] Energy Sector Volatility: Geopolitical Risk as a Tailwind for Energy Stocks [https://www.ainvest.com/news/energy-sector-volatility-geopolitical-risk-tailwind-energy-stocks-2508/]
[13] FSENX - Fidelity ® Select Energy Portfolio [https://fundresearch.fidelity.com/mutual-funds/summary/316390103]
[14] FSENX Summary [https://www.schwab.wallst.com/Prospect/Research/mutualfunds/Summary.asp?symbol=fsenx]
[15] Insights from Fidelity's portfolio manager Maurice FitzMaurice [https://www.fidelity.com/learning-center/trading-investing/maurice-fitzmaurice-oil]