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

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The Fidelity MSCI Materials Index ETF (FMAT - Free Report) 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.

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. 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%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $576.75 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

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 1.49%.

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 - Free Report) accounts for about 11.68% of total assets, followed by Freeport Mcmoran Inc Common Stock Usd.1 (FCX - Free Report) and Newmont Corp Common Stock Usd1.6 (NEM - Free Report) .

The top 10 holdings account for about 47.24% of total assets under management.

Performance and Risk

The ETF has added roughly 2.79% and was up about 13.95% so far this year and in the past one year (as of 04/21/2022), respectively. FMAT has traded between $44.12 and $51.04 during this last 52-week period.

The ETF has a beta of 1.14 and standard deviation of 26.87% for the trailing three-year period, making it a medium risk choice in the space. With about 126 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Materials Index ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FMAT is an excellent 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 - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $8.13 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $8.75 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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