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

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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.

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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Materials – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $524.79 million, 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.

The 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 1.60%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Linde Plc Common Stock (LIN) accounts for about 15.30% of total assets, followed by Freeport Mcmoran Inc Common Stock Usd.1 (FCX) and Sherwin Williams Co/the Common Stock Usd1.0 (SHW).

The top 10 holdings account for about 51% of total assets under management.

Performance and Risk

So far this year, FMAT has added about 5.20%, and it’s up approximately 9.94% in the last one year (as of 07/16/2024). During this past 52-week period, the fund has traded between $41.66 and $52.46.

The ETF has a beta of 1.11 and standard deviation of 19.86% for the trailing three-year period, making it a medium risk choice in the space. With about 118 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 ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.61 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $5.95 billion. XLB has an expense ratio of 0.09% 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

Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report

The Sherwin-Williams Company (SHW) : Free Stock Analysis Report

Materials Select Sector SPDR ETF (XLB): ETF Research Reports

Linde PLC (LIN) : Free Stock Analysis Report

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research Reports

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