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Should You Invest in the Fidelity MSCI Industrials Index ETF (FIDU)?

Zacks Equity Research
Acquisition of BluePay, Acculynk and CardConnect are significant additions to the First Data's (FDC) product portfolio.

Designed to provide broad exposure to the Industrials - Broad segment of the U.S. equity market, the Fidelity MSCI Industrials Index ETF (FIDU) is a passively managed exchange traded fund launched on 10/21/2013.

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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - 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 $569.63 M, making it one of the average sized ETFs attempting to match the performance of the Industrials - Broad segment of the U.S. 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 1.63%.

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 Industrials sector--about 100% of the portfolio.

Looking at individual holdings, Boeing Co/the (BA) accounts for about 6.63% of total assets, followed by General Electric Co (GE) and 3m Co (MMM).

The top 10 holdings account for about 36.93% of total assets under management.

Performance and Risk

Year-to-date, the Fidelity MSCI Industrials Index ETF has lost about -0.81% so far, and was up about 13.74% over the last 12 months (as of 05/14/2018). FIDU has traded between $33.37 and $41.16 in this past 52-week period.

The ETF has a beta of 1.11 and standard deviation of 14.38% for the trailing three-year period, making it a medium risk choice in the space. With about 347 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Industrials Index ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FIDU is an excellent option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR Fund (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.77 B in assets, Industrial Select Sector SPDR Fund has $12.94 B. 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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The Boeing Company (BA) : Free Stock Analysis Report
 
3M Company (MMM) : Free Stock Analysis Report
 
General Electric Company (GE) : Free Stock Analysis Report
 
VIPERS-INDUS (VIS): ETF Research Reports
 
SPDR-INDU SELS (XLI): ETF Research Reports
 
FID-INDUSTL (FIDU): ETF Research Reports
 
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