Should You Invest in the Fidelity MSCI Materials Index ETF (FMAT)?
Designed to provide broad exposure to the Materials - Broad segment of the equity market, the Fidelity MSCI Materials Index ETF (FMAT) 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. Materials - 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 $417.30 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FMAT seeks to match the performance of the MSCI USA IMI Materials Index before fees and expenses.
The MSCI USA IMI Materials Index represents the performance of the materials 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 2.04%.
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 Materials sector--about 100% of the portfolio.
Looking at individual holdings, Linde Plc Common Stock Eur.001 (LIN) accounts for about 12.72% of total assets, followed by Sherwin Williams Co/the Common Stock Usd1.0 (SHW) and Air Products + Chemicals Inc Common Stock Usd1.0 (APD).
The top 10 holdings account for about 46.44% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Materials Index ETF has lost about -14.95% so far, and is down about -11.25% over the last 12 months (as of 10/27/2022). FMAT has traded between $37.65 and $51.04 in this past 52-week period.
The ETF has a beta of 1.10 and standard deviation of 28.65% for the trailing three-year period, making it a medium risk choice in the space. With about 128 holdings, it effectively diversifies company-specific risk.
Alternatives
Fidelity MSCI Materials 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, FMAT is an outstanding option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.31 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $6.93 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
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 Materials Index ETF (FMAT): ETF Research Reports
Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report
The SherwinWilliams Company (SHW) : Free Stock Analysis Report
Materials Select Sector SPDR ETF (XLB): ETF Research Reports
Linde plc (LIN) : Free Stock Analysis Report
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research Reports
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