Should you invest in the Fidelity MSCI Industrials Index ETF (FIDU)?
DDesigned to provide broad exposure to the broad industrial segment of the equity market, the Fidelity MSCI Industrials Index ETF (FIDU) is a passively managed exchange-traded fund launched on 10/21/2013.
Retail and institutional investors are increasingly turning to passively managed ETFs because they offer low costs, transparency, flexibility and tax efficiency; these types of funds are also excellent vehicles for long-term investors.
Investor-friendly sector ETFs offer many options for gaining low-risk, diversified exposure to a broad group of companies in particular industries. Industry – Large is one of 16 major Zacks sectors within the Zacks Industry classification. He is currently ranked 6, which puts him in the top 38%.
The fund is sponsored by Fidelity. It has amassed assets of over $806.34 million, making it one of the mid-sized ETFs attempting to match the performance of the Industrial – Large segment of the stock market. FIDU seeks to match the performance of the MSCI USA IMI Industrials Index before fees and expenses.
The MSCI USA IMI Industrials Index represents the performance of the industrial sector in the US stock market.
Expense ratios are an important factor in an ETF’s performance and over the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
The annual operating expense of this ETF is 0.08%, making it the cheapest product on the market.
It has a 12-month dividend yield of 1.23%.
Sector exposure and main holdings
ETFs provide diversified exposure and thus minimize single-stock risk, but it’s still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has the largest allocation in the industrials sector, approximately 99.90% of the portfolio.
Looking at individual holdings, Union Pacific Corp Common Stock Usd2.5 (UNP) accounts for around 4.43% of total assets, followed by United Parcel Service Cl B Common Stock Usd.01 (UPS) and Raytheon Technologies Corp Common Stock Usd1.0 (RTX).
The top 10 holdings represent approximately 31.85% of total assets under management.
Performance and risks
The ETF has lost around -6% so far this year and is down around -1.02% over the past year (as of 4/22/2022). In the last 52-week period, it traded between $49.86 and $57.46.
The ETF has a beta of 1.18 and a standard deviation of 26.26% for the three-year period, making it a medium-risk pick in the space. With approximately 367 holdings, it effectively diversifies company-specific risks.
The Fidelity MSCI Industrials Index ETF carries a Zacks ETF rating of 3 (Hold), which is based on expected asset class return, expense ratio and momentum, among other factors. Thus, FIDU is a sufficient option for those seeking exposure to the industrial ETF sector of the market. Investors could also consider other ETF options in the space.
The Vanguard Industrials ETF (VIS) tracks the MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks the Industrial Select Sector Index. Vanguard Industrials ETF has $4.64 billion in assets, Industrial Select Sector SPDR ETF has $15.20 billion. VIS has a spend rate of 0.10% and XLI charges 0.10%.
To learn more about this product and other ETFs, find products that fit your investment goals, and read articles about the latest developments in the ETF investment universe, please visit Zacks ETF Center.
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ETF Fidelity MSCI Industrials Index ETF (FIDU): ETF Research Reports
Union Pacific Corporation (UNP): Free Stock Analysis Report
United Parcel Service, Inc. (UPS): Free Inventory Analysis Report
Vanguard Industrials ETF (VIS): ETF Research Reports
ETF SPDR selected industrial sector (XLI): ETF research reports
Raytheon Technologies Corporation (RTX): Free Inventory Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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