Looking for a way to gain broad exposure to the Industrials sector of the equity market? The Fidelity MSCI Industrials Index ETF (FIDU) might be the answer you’re seeking. This passively managed exchange traded fund, launched in October 2013, has quickly become a popular choice for both institutional and retail investors due to its compelling features.
Passively managed ETFs
are renowned for their low costs, transparency, flexibility, and tax efficiency, making them ideal vehicles for long-term investment strategies. Sector ETFs, such as FIDU, offer convenience and diversification, providing investors with a low-risk way to gain exposure to a broad range of companies within a specific industry.The Industrials – Broad
sector, one of the 16 broad Zacks sectors, is currently ranked 13th, placing it in the bottom 19% of the overall market. FIDU, sponsored by Fidelity, has amassed over $1.12 billion in assets, solidifying its position as a medium-sized ETF. Its objective is to mirror the performance of the MSCI USA IMI Industrials Index, representing the industrial sector within the U.S. equity market.Cost-efficiency
is a crucial factor in any investment, and FIDU excels in this regard. With an annual operating expense ratio of just 0.08%, it ranks among the least expensive ETFs in its category. It also boasts a 12-month trailing dividend yield of 1.25%, providing investors with a steady stream of income.Transparency
is a cornerstone of ETF investing, and FIDU adheres to this principle. The fund’s holdings are disclosed daily, allowing investors to readily assess the underlying companies driving its performance. FIDU has a concentrated allocation in the Industrials sector, with approximately 100% of the portfolio dedicated to this industry. Among its top holdings, General Electric Co (GE) accounts for roughly 3.64% of total assets, followed closely by Caterpillar Inc (CAT) and RTX Corp (RTX). Notably, the top 10 holdings collectively represent about 27.06% of the total assets under management.Performance and Risk
are crucial considerations for any investor. FIDU has demonstrated strong performance, with a gain of approximately 14.28% year-to-date and a rise of about 26.57% in the past year (as of September 16, 2024). During this period, the fund traded between $51.08 and $70.26. FIDU’s beta of 1.10 and standard deviation of 18.10% over the past three years indicate that it carries a medium risk profile. With approximately 371 holdings, the ETF effectively diversifies company-specific risk, mitigating the impact of individual stock fluctuations.Alternatives
are always worth exploring. The Vanguard Industrials ETF (VIS) tracks the MSCI US Investable Market Industrials 25/50 Index, while the Industrial Select Sector SPDR ETF (XLI) tracks the Industrial Select Sector Index. VIS boasts $5.37 billion in assets, while XLI manages $19.29 billion. VIS has an expense ratio of 0.10%, while XLI charges 0.09%.Overall, the Fidelity MSCI Industrials Index ETF (FIDU) presents a compelling opportunity for investors seeking broad exposure to the Industrials sector. Its low costs, transparency, and strong performance history make it an attractive choice for long-term investors. When considering FIDU, it’s important to remember that it’s not a get-rich-quick scheme. Investing involves risks, and past performance is not indicative of future results. However, for investors seeking a well-diversified and potentially profitable way to invest in the Industrials sector, FIDU stands out as a worthy option.
