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

If you're interested in broad exposure to the Industrials - Broad segment of the equity market, look no further than the Fidelity MSCI Industrials Index ETF (FIDU), a passively managed exchange traded fund launched on 10/21/2013.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $444.33 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

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 1.78%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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, Boeing Co/the (BA) accounts for about 6.74% of total assets, followed by Union Pacific Corp (UNP) and Honeywell International Inc (HON).

The top 10 holdings account for about 35.99% of total assets under management.

Performance and Risk

So far this year, FIDU has added about 18.00%, and it's up approximately 0.42% in the last one year (as of 06/07/2019). During this past 52-week period, the fund has traded between $30.66 and $40.96.

The ETF has a beta of 1.20 and standard deviation of 14.74% for the trailing three-year period, making it a medium risk choice in the space. With about 354 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 Fund (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.45 B in assets, Industrial Select Sector SPDR Fund has $9.91 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.

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Fidelity MSCI Industrials Index ETF (FIDU): ETF Research Reports
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
The Boeing Company (BA) : Free Stock Analysis Report
 
Honeywell International Inc. (HON) : Free Stock Analysis Report
 
Industrial Select Sector SPDR Fund (XLI): ETF Research Reports
 
Vanguard Industrials ETF (VIS): ETF Research Reports
 
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