Launched on 10/21/2013, the Fidelity MSCI Financials Index ETF (
FNCL Quick Quote FNCL - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
The fund is sponsored by Fidelity. It has amassed assets over $1.61 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Broad segment of the equity market. FNCL seeks to match the performance of the MSCI USA IMI Financials Index before fees and expenses.
The MSCI USA IMI Financials Index represents the performance of the financial sector in the U.S. equity market.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.17%.
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 Financials sector--about 100% of the portfolio.
Looking at individual holdings, Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (
BRK.B Quick Quote BRK.B - Free Report) accounts for about 8.18% of total assets, followed by Jpmorgan Chase + Co Common Stock Usd1.0 ( JPM Quick Quote JPM - Free Report) and Bank Of America Corp Common Stock Usd.01 ( BAC Quick Quote BAC - Free Report) .
The top 10 holdings account for about 37.15% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Financials Index ETF has lost about -9.21% so far, and is down about -9.67% over the last 12 months (as of 11/23/2022). FNCL has traded between $43.08 and $58.97 in this past 52-week period.
The ETF has a beta of 1.10 and standard deviation of 31.89% for the trailing three-year period, making it a medium risk choice in the space. With about 390 holdings, it effectively diversifies company-specific risk.
Fidelity MSCI Financials 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, FNCL is a great option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Vanguard Financials ETF (
VFH Quick Quote VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF ( XLF Quick Quote XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $9.24 billion in assets, Financial Select Sector SPDR ETF has $33.38 billion. VFH has an expense ratio of 0.10% and XLF charges 0.10%. Bottom Line
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