The Fidelity MSCI Financials Index ETF (FNCL) is a passively managed exchange-traded fund (ETF) launched on October 21, 2013. It is designed to provide broad exposure to the U.S. financial sector.
Why Consider ETFs Like FNCL?
Passively managed ETFs are popular with both institutional and retail investors for several reasons:
- Low Costs: They have lower expense ratios compared to actively managed funds.
- Transparency: Their holdings are disclosed daily.
- Flexibility: They can be traded like stocks during market hours.
- Tax Efficiency: They are often more tax-friendly than mutual funds.
Sector ETFs, like FNCL, offer a simple way to invest in specific industries. In this case, FNCL focuses entirely on the financial sector, which is one of the top-performing sectors in the market.
Fund Details
- Sponsor: Fidelity
- Assets Under Management (AUM): Over $2.07 billion
- Index Tracked: MSCI USA IMI Financials 25/50 Index
- Purpose: The index represents the financial sector within the U.S. equity market.
Costs
Expense ratios are crucial when selecting an ETF. FNCL has an annual expense ratio of just 0.08%, making it one of the most affordable options in its category. It also offers a 12-month trailing dividend yield of 1.52%.
Sector Allocation and Top Holdings
FNCL is heavily focused on the financial sector, with 100% of its portfolio invested in companies within this industry.
Some of its largest holdings include:
- JPMorgan Chase & Co. (JPM) – 8.47% of assets
- Berkshire Hathaway Inc. Class B (BRK.B)
- Visa Inc. Class A (V)
The top 10 holdings make up about 43.06% of the total assets, while the fund overall holds approximately 409 stocks, reducing company-specific risks.
Performance and Risk
- Past Year Performance: FNCL is up 30.21% over the last 12 months (as of January 2, 2025).
- 52-Week Range: $52.62 to $73.31
- Beta: 1.09 (slightly more volatile than the overall market)
- Standard Deviation: 19.57% (indicating moderate risk).
Alternatives to FNCL
While FNCL offers broad exposure to the financial sector, it currently holds a Zacks ETF Rank of 4 (Sell), suggesting that better options may be available.
Here are two alternatives to consider:
- Vanguard Financials ETF (VFH)
- Tracks the MSCI US Investable Market Financials 25/50 Index
- Assets: $11.26 billion
- Expense Ratio: 0.10%
- Financial Select Sector SPDR ETF (XLF)
- Tracks the Financial Select Sector Index
- Assets: $48.13 billion
- Expense Ratio: 0.09%
Bottom Line
FNCL is a cost-effective ETF for gaining exposure to the financial sector. However, its Zacks Rank suggests there may be better-performing ETFs to meet your investment goals. Before investing, compare ETFs based on factors like performance, expense ratios, and sector exposure.
For more insights, explore tools and articles available on the Zacks ETF Center.