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

Sweta Killa

The Fidelity MSCI Materials Index ETF (FMAT) was launched on 10/21/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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. Materials - 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 $226.32 M, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FMAT seeks to match the performance of the MSCI USA IMI Materials Index before fees and expenses.

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MSCI USA IMI Materials Index represents the performance of the materials 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 1.84%.

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 Materials sector--about 100% of the portfolio.

Looking at individual holdings, Dowdupont Inc (DWDP) accounts for about 14.57% of total assets, followed by Linde Plc (LIN) and Ecolab Inc (ECL).

The top 10 holdings account for about 54.07% of total assets under management.

Performance and Risk

The ETF has gained about 15.98% so far this year and is up about 1.99% in the last one year (as of 04/09/2019). In that past 52-week period, it has traded between $26.67 and $35.34.

The ETF has a beta of 1.18 and standard deviation of 15.44% 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 sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FMAT, then, is not a great choice for investors seeking exposure to the Materials ETFs segment of the market. However, there are better ETFs in the space to consider.

Materials Select Sector SPDR Fund (XLB) tracks Materials Select Sector Index and the FlexShares Morningstr Globl Upstream Naturl Resourcs Indx Fund (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR Fund has $4.32 B in assets, FlexShares Morningstr Globl Upstream Naturl Resourcs Indx Fund has $5.81 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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Fidelity MSCI Materials Index ETF (FMAT): ETF Research Reports
 
Ecolab Inc. (ECL) : Free Stock Analysis Report
 
Materials Select Sector SPDR Fund (XLB): ETF Research Reports
 
Praxair, Inc. (LIN) : Free Stock Analysis Report
 
Dow Chemical Company (The) (DWDP) : Free Stock Analysis Report
 
FlexShares Morningstr Globl Upstream Naturl Resourcs Indx Fund (GUNR): ETF Research Reports
 
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Zacks Investment Research