Back to top

Image: Bigstock

Should You Invest in the Fidelity MSCI Industrials Index ETF (FIDU)?

Read MoreHide Full Article

Looking for broad exposure to the Industrials - Broad segment of the equity market? You should consider the Fidelity MSCI Industrials Index ETF (FIDU - 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.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $455.16 M, making it one of the average sized ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. FIDU seeks to match the performance of the MSCI USA IMI Industrials Index before fees and expenses.

MSCI USA IMI Industrials Index represents the performance of the industrial sector in the U.S. equity market.

Costs

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 1.69%.

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 Industrials sector--about 100% of the portfolio.

Looking at individual holdings, Boeing Co/the (BA - Free Report) accounts for about 6.15% of total assets, followed by Honeywell International Inc (HON - Free Report) and United Technologies Corp (UTX - Free Report) .

Performance and Risk

So far this year, FIDU has added about 29.68%, and is up about 15.39% in the last one year (as of 11/12/2019). During this past 52-week period, the fund has traded between $30.66 and $41.95.

The ETF has a beta of 1.19 and standard deviation of 15.16% for the trailing three-year period, making it a medium risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.

Alternatives

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

Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR Fund (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.72 B in assets, Industrial Select Sector SPDR Fund has $10.93 B. VIS has an expense ratio of 0.10% and XLI charges 0.13%.

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.

Published in