While many mutual fund companies have resisted getting into the ETF market, several have slowly started to put out products in the space. The latest to embrace this trend appears to be Fidelity, as the company recently put out 10 sector ETFs targeting the U.S. market.
These ten funds represent the only products in the company’s ETF offering, save for their Nasdaq Composite Tracking ETF (ONEQ). This product offers up broad exposure to Nasdaq-listed stocks, and has about a quarter billion in assets, though volume is still light. So, this is really Fidelity’s first real foray into the ETF world, and it remains to be seen if the market can support even more sector ETFs.
Why they might succeed
While the U.S. sector ETF market is extremely competitive, there could be plenty of interest in Fidelity ETFs from the right type of investor. All of these sector funds look to trade commission-free on the Fidelity platform, making them prime choices for those who have Fidelity accounts, but haven’t yet jumped into the ETF space (see 3 Sector ETFs Crushing the Market in 2013).
Additionally, the products will be ultra-low cost, so Fidelity looks to be a fierce competitor on this front, and may attract cost-conscious investors even if they don’t have brokerage accounts with Fidelity. All of the 10 sector funds will have expense ratios of just 12 basis points, just edging out Vanguard who is traditionally thought of as the low-cost ETF provider, and charging 14 basis points for similar products.
The funds in the lineup include:
- MSCI Consumer Staples Index ETF (FSTA)
- MSCI Consumer Discretionary Index ETF (FDIS - ETF report)
- MSCI Telecommunications Services Index ETF (FCOM - ETF report)
- MSCI Industrials Index ETF (FIDU - ETF report)
- MSCI Utilities Index ETF (FUTY - ETF report)
- MSCI Information Technology Index ETF (FTEC - ETF report)
- MSCI Health Care Index ETF (FHLC - ETF report)
- MSCI Materials Index ETF (FMAT - ETF report)
- MSCI Energy Index ETF (FENY - ETF report)
- MSCI Financials Index ETF (FNCL - ETF report)
These products look to provide investors with broad, cap weighted exposure (so a focus on large caps) to the U.S. market by sector. Most of the ETFs have at least a hundred holdings, though telecoms (just 33 stocks) and utilities (79 stocks) appear to be laggards on this front.
Still, even with a robust number of holdings, there are definitely some concentration issues, at least in a few sectors. Especially in the telecom space—dominated by VZ and T—and then technology with AAPL, some products are pretty concentrated into a few key stocks, though they all do provide broad exposure to their respective sectors.(...)Click here to continue reading the original ETFDailyNews.com article: A Look At Fidelity’s New Low Cost Sector ETF LineupYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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