Should You Invest in the Fidelity MSCI Financials Index ETF (FNCL)?
If you're interested in broad exposure to the Financials - Broad segment of the equity market, look no further than the Fidelity MSCI Financials Index ETF (FNCL), 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.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
Index Details
The fund is sponsored by Fidelity. It has amassed assets over $1.73 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Broad segment of the equity market. FNCL seeks to match the performance of the MSCI USA IMI Financials Index before fees and expenses.
The MSCI USA IMI Financials Index represents the performance of the financial sector in the U.S. equity market.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 1.57%.
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 Financials sector--about 100% of the portfolio.
Looking at individual holdings, Jpmorgan Chase + Co Common Stock Usd1.0 (JPM) accounts for about 8.61% of total assets, followed by Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (BRK.B) and Visa Inc Class A Shares Common Stock Usd.0001 (V).
The top 10 holdings account for about 43.77% of total assets under management.
Performance and Risk
Year-to-date, the Fidelity MSCI Financials Index ETF has gained about 18.06% so far, and is up about 33.98% over the last 12 months (as of 08/26/2024). FNCL has traded between $44.01 and $62.71 in this past 52-week period.
The ETF has a beta of 1.09 and standard deviation of 19.57% for the trailing three-year period, making it a medium risk choice in the space. With about 403 holdings, it effectively diversifies company-specific risk.
Alternatives
Fidelity MSCI Financials 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, FNCL is a reasonable option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $10.04 billion in assets, Financial Select Sector SPDR ETF has $44.01 billion. VFH has an expense ratio of 0.10% and XLF charges 0.09%.
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 Financials Index ETF (FNCL): ETF Research Reports
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
Vanguard Financials ETF (VFH): ETF Research Reports