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

Zacks Equity Research

If you're interested in broad exposure to the Industrials - Broad segment of the equity market, look no further than the Fidelity MSCI Industrials Index ETF (FIDU), 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 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 16, placing it in bottom 0%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $450.26 M, 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

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 1.73%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 6.39% of total assets, followed by Honeywell International Inc (HON) and Union Pacific Corp (UNP).

The top 10 holdings account for about 35.74% of total assets under management.

Performance and Risk

The ETF has gained about 27.15% and was up about 12.24% so far this year and in the past one year (as of 12/04/2019), respectively. FIDU has traded between $30.66 and $42.40 during this last 52-week period.

The ETF has a beta of 1.19 and standard deviation of 15.05% for the trailing three-year period, making it a medium risk choice in the space. With about 349 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Industrials 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, FIDU is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

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 $3.59 B in assets, Industrial Select Sector SPDR Fund has $10.93 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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Fidelity MSCI Industrials Index ETF (FIDU): ETF Research Reports
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
The Boeing Company (BA) : Free Stock Analysis Report
 
Honeywell International Inc. (HON) : Free Stock Analysis Report
 
Industrial Select Sector SPDR Fund (XLI): ETF Research Reports
 
Vanguard Industrials ETF (VIS): ETF Research Reports
 
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