Should you invest in the Fidelity MSCI Financials Index ETF (FNCL)?

On By Littum

Launched on 21/10/2013, Fidelity MSCI Financials Index ETF (FNCL) is a passively managed exchange-traded fund designed to provide broad exposure to the Financials – Broad segment of the stock 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 cost, transparency, flexibility and tax efficiency.

In addition, sector ETFs offer convenient ways to achieve low risk and diversified exposure to a broad group of companies in specific sectors. Financials – Broad is one of the 16 broad Zacks sectors within the Zacks Industry Classification. It is currently ranked 1, placing it in the top 6%.

The fund is sponsored by Fidelity. It has accumulated assets of over $2.07 billion, making it one of the larger ETFs that tries to match the performance of the financials – broad segment of the stock 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 US stock market.

Since cheaper funds tend to outperform more expensive funds, all other factors remaining equal, it’s important for investors to pay attention to an ETF’s expense ratio.

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

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

Although ETFs offer diversified exposure that minimizes the risk of individual stocks, investors should also look at the actual holdings in the fund. Fortunately, most ETFs are highly transparent products that disclose their holdings on a daily basis.

This ETF has the heaviest allocation in the financial sector – around 100% of the portfolio.

Looking at individual holdings, Jpmorgan Chase + Co Common Stock Usd1.0 (JPM) accounts for about 8.47% of total assets, followed by Berkshire Hathaway Inc Cl B Common Stock Usd.0033 (BRK.B) and Visa Inc Class A Shares Common Stock Usd.0001 (V).

The top 10 holdings account for about 43.06% of total assets under management.

Year to date, the Fidelity MSCI Financials Index ETF has added approx. 0% so far and has risen about 30.21% over the last 12 months (as of 01/02/2025). FNCL has traded between $52.62 and $73.31 over the past 52-week period.

The ETF has a beta of 1.09 and a standard deviation of 19.57% for the trailing three-year period, making it a medium-risk pick in the area. With around 409 holdings, it effectively diversifies company-specific risk.