Investment Education

Launched on 10/21/2013, the Fidelity MSCI Financials Index ETF (FNCL) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Broad segment of the equity market.

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.

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. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $1.83 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 25/50 Index represents the performance of the financial sector in the U.S. equity market.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.52%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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, Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (BRK.B) accounts for about 8.33% of total assets, followed by Jpmorgan Chase + Co Common Stock Usd1.0 (JPM) and Visa Inc Class A Shares Common Stock Usd.0001 (V).

The top 10 holdings account for about 43.35% of total assets under management.

Performance and Risk

The ETF has added roughly 24.47% so far this year and is up about 49.09% in the last one year (as of 10/28/2024). In that past 52-week period, it has traded between $44.74 and $67.45.

The ETF has a beta of 1.08 and standard deviation of 19.42% for the trailing three-year period, making it a medium risk choice in the space. With about 406 holdings, it effectively diversifies company-specific risk.