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Should You Invest in the Fidelity MSCI Materials Index ETF (FMAT)?

Zacks Equity Research
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The Fidelity MSCI Materials Index ETF (FMAT) was launched on 10/21/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad segment of the equity market.

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 7, placing it in top 44%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $263.77 M, 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.

MSCI USA IMI Materials Index represents the performance of the materials sector in the U.S. equity market.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 1.65%.

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 Materials sector--about 100% of the portfolio.

Looking at individual holdings, Dowdupont Inc (DWDP) accounts for about 17.94% of total assets, followed by Praxair Inc (PX) and Ecolab Inc (ECL).

The top 10 holdings account for about 50.28% of total assets under management.

Performance and Risk

The ETF has lost about -0.71% and is up about 12.16% so far this year and in the past one year (as of 08/10/2018), respectively. FMAT has traded between $30.89 and $37.07 during this last 52-week period.

The ETF has a beta of 1.28 and standard deviation of 16.56% for the trailing three-year period, making it a medium risk choice in the space. With about 123 holdings, it effectively diversifies company-specific risk.

Alternatives

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

Materials Select Sector SPDR Fund (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR Fund has $4.74 B in assets, FlexShares Morningstar Global Upstream Natural Resources Index Fund has $5.76 B. XLB has an expense ratio of 0.13% 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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FID-MATRLS (FMAT): ETF Research Reports
 
Ecolab Inc. (ECL) : Free Stock Analysis Report
 
Praxair, Inc. (PX) : Free Stock Analysis Report
 
SPDR-MATLS SELS (XLB): ETF Research Reports
 
Dow Chemical Company (The) (DWDP) : Free Stock Analysis Report
 
FLEXS-MRN GUNR (GUNR): ETF Research Reports
 
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