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

Sector ETF report for FIDU

By
This story originally appeared on Zacks

Launched on 10/21/2013, the Fidelity MSCI Industrials Index ETF (FIDU) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Broad segment of the equity market.

- Zacks

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. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $850.67 million, 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

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 1.09%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that 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, Honeywell International Inc Common Stock Usd1.0 (HON) accounts for about 3.79% of total assets, followed by United Parcel Service Cl B Common Stock Usd.01 (UPS) and Union Pacific Corp Common Stock Usd2.5 (UNP).

The top 10 holdings account for about 30.85% of total assets under management.

Performance and Risk

The ETF has added roughly 18.04% and was up about 36.62% so far this year and in the past one year (as of 09/13/2021), respectively. FIDU has traded between $39.03 and $55.65 during this last 52-week period.

The ETF has a beta of 1.21 and standard deviation of 26.65% for the trailing three-year period, making it a medium risk choice in the space. With about 348 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Industrials 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, FIDU is an outstanding option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $5.29 billion in assets, Industrial Select Sector SPDR ETF has $17.93 billion. VIS has an expense ratio of 0.10% and XLI charges 0.12%.

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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Fidelity MSCI Industrials Index ETF (FIDU): ETF Research Reports

 

Honeywell International Inc. (HON): Free Stock Analysis Report

 

Union Pacific Corporation (UNP): Free Stock Analysis Report

 

United Parcel Service, Inc. (UPS): Free Stock Analysis Report

 

Vanguard Industrials ETF (VIS): ETF Research Reports

 

Industrial Select Sector SPDR ETF (XLI): ETF Research Reports

 

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Zacks Investment Research