Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the Fidelity MSCI Materials Index ETF (
FMAT Quick Quote FMAT - Free Report) , 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.
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. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
The fund is sponsored by Fidelity. It has amassed assets over $359.78 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.
MSCI USA IMI Materials Index represents the performance of the materials sector in the U.S. equity market.
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 1.97%.
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, Linde Plc Common Stock Eur.001 (
LIN Quick Quote LIN - Free Report) accounts for about 12.22% of total assets, followed by Air Products + Chemicals Inc Common Stock Usd1.0 ( APD Quick Quote APD - Free Report) and Dupont De Nemours Inc Common Stock Usd.01 ( DD Quick Quote DD - Free Report) .
The top 10 holdings account for about 52.17% of total assets under management.
Performance and Risk
The ETF has gained about 9.85% and was up about 93.43% so far this year and in the past one year (as of 03/22/2021), respectively. FMAT has traded between $20.81 and $44.28 during this last 52-week period.
The ETF has a beta of 1.15 and standard deviation of 26.94% for the trailing three-year period, making it a medium risk choice in the space. With about 116 holdings, it effectively diversifies company-specific risk.
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.
FlexShares Morningstar Global Upstream Natural Resources ETF (
GUNR Quick Quote GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF ( XLB Quick Quote XLB - Free Report) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $4.68 billion in assets, Materials Select Sector SPDR ETF has $6.62 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.12%. Bottom Line
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Zacks ETF Center.