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

Zacks Equity Research
MetLife (MET) seems to be a good value pick, as it has decent revenue metrics to back up its earnings, and is seeing solid earnings estimate revisions as well.

Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the Fidelity MSCI Materials Index ETF (FMAT), a passively managed exchange traded fund launched on 10/21/2013.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $253.53 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 1.77%.

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 18.21% of total assets, followed by Praxair Inc (PX) and Ecolab Inc (ECL).

The top 10 holdings account for about 51.09% of total assets under management.

Performance and Risk

The ETF has lost about -2.85% and is up roughly 3.62% so far this year and in the past one year (as of 10/01/2018), respectively. FMAT has traded between $32.24 and $37.07 during this last 52-week period.

The ETF has a beta of 1.25 and standard deviation of 15.75% 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 reasonable 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 $4.70 B in assets, FlexShares Morningstar Global Upstream Natural Resources Index Fund has $5.79 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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