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Should You Invest in the Fidelity MSCI Financials Index ETF (FNCL)?

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  • VFH
  • BRK-B

If you're interested in broad exposure to the Financials - Broad segment of the equity market, look no further than the Fidelity MSCI Financials Index ETF (FNCL), a passively managed exchange traded fund launched on 10/21/2013.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $1.97 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Broad segment of the equity market. FNCL seeks to match the performance of the MSCI USA IMI Financials Index before fees and expenses.

MSCI USA IMI Financials Index represents the performance of the financial 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 1.61%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.

Looking at individual holdings, Jpmorgan Chase + Co Common Stock Usd1.0 (JPM) accounts for about 9.52% of total assets, followed by Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (BRK.B) and Bank Of America Corp Common Stock Usd.01 (BAC).

The top 10 holdings account for about 42.09% of total assets under management.

Performance and Risk

The ETF has gained about 40.75% so far this year and it's up approximately 63.65% in the last one year (as of 11/08/2021). In that past 52-week period, it has traded between $37.94 and $58.47.

The ETF has a beta of 1.19 and standard deviation of 29.99% for the trailing three-year period, making it a medium risk choice in the space. With about 391 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Financials Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FNCL is a sufficient option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $11.70 billion in assets, Financial Select Sector SPDR ETF has $45.52 billion. VFH has an expense ratio of 0.10% and XLF charges 0.12%.

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 Financials Index ETF (FNCL): ETF Research Reports
 
Bank of America Corporation (BAC) : Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
 
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
Vanguard Financials ETF (VFH): ETF Research Reports
 
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