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Should You Invest in the Fidelity MSCI Consumer Staples Index ETF (FSTA)?

Zacks Equity Research

Launched on 10/21/2013, the Fidelity MSCI Consumer Staples Index ETF (FSTA) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Staples - Broad segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $635.98 million, making it one of the larger ETFs attempting to match the performance of the Consumer Staples - Broad segment of the equity market. FSTA seeks to match the performance of the MSCI USA IMI Consumer Staples Index before fees and expenses.

MSCI USA IMI Consumer Staples Index represents the performance of the consumer staples sector in the U.S. equity market.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 2.74%.

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 Consumer Staples sector--about 100% of the portfolio.

Looking at individual holdings, Procter + Gamble Co/the (PG) accounts for about 14.60% of total assets, followed by Coca Cola Co/the (KO) and Pepsico Inc (PEP).

The top 10 holdings account for about 68.52% of total assets under management.

Performance and Risk

The ETF has lost about -5.76% so far this year and is up roughly 2.24% in the last one year (as of 07/03/2020). In that past 52-week period, it has traded between $28.75 and $38.70.

The ETF has a beta of 0.59 and standard deviation of 18.52% for the trailing three-year period, making it a medium risk choice in the space. With about 96 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Consumer Staples Index ETF sports a Zacks ETF Rank of 5 (Strong Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FSTA, then, is not the best option for investors seeking exposure to the Consumer Staples ETFs segment of the market. However, there are better ETFs in the space to consider.

Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $5.23 billion in assets, Consumer Staples Select Sector SPDR ETF has $13.22 billion. VDC has an expense ratio of 0.10% and XLP charges 0.13%.

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.


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Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports
 
CocaCola Company The (KO) : Free Stock Analysis Report
 
Procter Gamble Company The (PG) : Free Stock Analysis Report
 
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
 
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
 
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
 
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