Should You Invest in the Fidelity MSCI Materials Index ETF (FMAT)?

Zacks

Looking for broad exposure to the Materials – Broad segment of the U.S. equity market? You should consider the Fidelity MSCI Materials Index ETF (FMAT Free Report) , a passively managed exchange traded fund launched on 10/21/2013.

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. Materials – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $292.08 M, making it one of the average sized ETFs attempting to match the performance of the Materials – Broad segment of the U.S. equity market. FMAT seeks to match the performance of the MSCI USA IMI Materials Index before fees and expenses.

MSCI USA IMI Materials Index represents the performance of the materials 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 1.56%.

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.

Looking at individual holdings, Dowdupont Inc (DWDP Free Report) accounts for about 16.77% of total assets, followed by Monsanto Co and Praxair Inc (PX Free Report) .

The top 10 holdings account for about 50.71% of total assets under management.

Performance and Risk

The ETF has added about 0.27% so far this year and is up about 11.75% in the last one year (as of 06/14/2018). In that past 52-week period, it has traded between $30.88 and $37.07.

The ETF has a beta of 1.28 and standard deviation of 16.68% for the trailing three-year period, making it a medium risk choice in the space. With about 123 holdings, it effectively diversifies company-specific risk.

Alternatives

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

Materials Select Sector SPDR Fund (XLB Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR Fund has $5.15 B in assets, FlexShares Morningstar Global Upstream Natural Resources Index Fund has $5.77 B. XLB has an expense ratio of 0.13% and GUNR charges 0.46%.

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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