Launched on 10/21/2013, the Fidelity MSCI Materials Index ETF (FMAT - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Materials - 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.
Additionally, sector ETFs offer convenient 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 14, placing it in bottom 13%.
The fund is sponsored by Fidelity. It has amassed assets over $201.24 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.
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 1.92%.
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 Materials sector--about 100% of the portfolio.
Looking at individual holdings, Linde Plc (LIN - Free Report) accounts for about 11.89% of total assets, followed by Ecolab Inc (ECL - Free Report) and Dupont De Nemours Inc (DD - Free Report) .
The top 10 holdings account for about 51.33% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Materials Index ETF has added about 17.33% so far, and is down about -2.03% over the last 12 months (as of 09/16/2019). FMAT has traded between $26.67 and $35.16 in this past 52-week period.
The ETF has a beta of 1.23 and standard deviation of 15.52% 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.
Fidelity MSCI Materials Index ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FMAT, then, is not the best option for investors seeking exposure to the Materials ETFs segment of the market. However, there are better ETFs in the space to consider.
Materials Select Sector SPDR Fund (XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstr Globl Upstream Naturl Resourcs Indx Fund (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR Fund has $4.43 B in assets, FlexShares Morningstr Globl Upstream Naturl Resourcs Indx Fund has $5.59 B. XLB has an expense ratio of 0.13% and GUNR charges 0.46%.
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