Among the various uses of ETFs, crafting a roster of sector-by-sector exposures via the ETF wrapper has been one of the most popular. Many asset managers offer ETFs to invest in sectors from utilities to health care and more. Fidelity Investments offers its own roster with billions in AUM, but how do they match up compared to other sector ETFs?
See more: ETF 101: Mutual Fund to ETF Conversion
Consider the Fidelity MSCI Financials ETF (FNCL). FNCL tracks its index to reflect the financial sector, with FNCL offering deep exposure via its larger number of holdings than some rival strategies.
FNCL charges 8 bps, a relatively cheap fee for the space. Interestingly, per VettaFi data, FNCL offers more small and mid cap exposure in financials than some other like ETFs. Broader exposure can help pick up on additional opportunities, while also diversifying within a given sector. The ETF has returned 36.5% over the last one year per VettaFi data as of March 28th.
How about industrials? The space has benefitted from reshoring following the pandemic’s thrashing of global supply chains. U.S. government investment in renewable technology, too, has boosted the case for industrials. The Fidelity MSCI Industrial Index ETF (FIDU) charges the same fee as FNCL at 8.4 bps.
In doing so, the strategy has returned 34% over one year, according to VettaFi data as of March 28th. That has helped it outperform both its ETF Database Category and Factset Segment averages.
Taken together, sector ETFs can provide competitive and appealing exposures to market segments. Investors can use those ETFs to make tactical or strategic moves for their portfolios, providing a potentially strong roster of options to adjust in an ever-changing market landscape.
For investors looking to build a portfolio with sector strategies as building blocks, options abound. Fidelity Investments’ strategies, however, at least in this case, offer different advantages compared to some of their peers.
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