Should You Invest in the Fidelity MSCI Industrials Index ETF (FIDU)?
Designed to provide broad exposure to the Industrials - Broad segment of the equity market, the Fidelity MSCI Industrials Index ETF (FIDU) is a passively managed exchange traded fund launched on 10/21/2013.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
Index Details
The fund is sponsored by Fidelity. It has amassed assets over $350.37 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. FIDU seeks to match the performance of the MSCI USA IMI Industrials Index before fees and expenses.
MSCI USA IMI Industrials Index represents the performance of the industrial sector in the U.S. equity market.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 1.84%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is 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 heaviest allocation in the Industrials sector--about 100% of the portfolio.
Looking at individual holdings, Union Pacific Corp (UNP) accounts for about 4.55% of total assets, followed by Honeywell International Inc (HON) and Raytheon Technologies Corp (RTX).
The top 10 holdings account for about 32.58% of total assets under management.
Performance and Risk
The ETF has lost about -23.63% and is down about -18.68% so far this year and in the past one year (as of 06/09/2020), respectively. FIDU has traded between $25.14 and $43.87 during this last 52-week period.
The ETF has a beta of 1.18 and standard deviation of 25.04% for the trailing three-year period, making it a medium risk choice in the space. With about 348 holdings, it effectively diversifies company-specific risk.
Alternatives
Fidelity MSCI Industrials Index ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FIDU, then, is not a great choice for investors seeking exposure to the Industrials ETFs segment of the market. However, there are better ETFs in the space to consider.
Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.10 billion in assets, Industrial Select Sector SPDR ETF has $9.68 billion. VIS has an expense ratio of 0.10% and XLI 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 Industrials Index ETF (FIDU): ETF Research Reports
Union Pacific Corporation (UNP) : Free Stock Analysis Report
Honeywell International Inc. (HON) : Free Stock Analysis Report
Vanguard Industrials ETF (VIS): ETF Research Reports
Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
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