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Should You Invest in the Fidelity MSCI Consumer Discretionary Index ETF (FDIS)?

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Launched on 10/21/2013, the Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Discretionary - 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 are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $1.07 billion, making it one of the largest ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. FDIS seeks to match the performance of the MSCI USA IMI Consumer Discretionary Index before fees and expenses.

The MSCI USA IMI Consumer Discretionary Index represents the performance of the consumer discretionary sector in the U.S. equity market.

Costs

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 the least expensive product in the space.

It has a 12-month trailing dividend yield of 0.93%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Discretionary sector--about 96.40% of the portfolio.

Looking at individual holdings, Amazon.com Inc Common Stock Usd.01 (AMZN - Free Report) accounts for about 21.43% of total assets, followed by Tesla Inc Common Stock Usd.001 (TSLA - Free Report) and Home Depot Inc Common Stock Usd.05 (HD - Free Report) .

The top 10 holdings account for about 60.31% of total assets under management.

Performance and Risk

The ETF return is roughly 13.79% so far this year and is down about -7.12% in the last one year (as of 05/02/2023). In that past 52-week period, it has traded between $55.45 and $74.41.

The ETF has a beta of 1.25 and standard deviation of 25.89% for the trailing three-year period, making it a medium risk choice in the space. With about 304 holdings, it effectively diversifies company-specific risk.

Alternatives

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

Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $4.11 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $14.29 billion. VCR has an expense ratio of 0.10% and XLY charges 0.10%.

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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