Launched on October 21, 2013, the Fidelity MSCI Financials Index ETF (FNCL) is a passively managed exchange-traded fund designed to provide broad exposure to the financial sector – broad segment of the stock market.

While passively managed ETFs are an excellent vehicle for long-term investors, they are also popular with institutional and retail investors due to their low costs, transparency, flexibility and tax efficiency.

Additionally, sector ETFs provide convenient ways to gain low-risk, 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, which puts it in the top 6%.

The fund is sponsored by Fidelity. It has accumulated over $2.07 billion in assets, making it one of the larger ETFs attempting to match the performance of the financial sector – Broad segment of the stock market. FNCL aims 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.

Because cheaper funds tend to perform better than more expensive funds, it is important for investors to pay attention to an ETF’s expense ratio, all other factors being equal.

The annual operating costs for this ETF are 0.08%, making it one of the cheapest products in this space.

The trailing 12-month dividend yield is 1.52%.

Although ETFs provide diversified exposure that minimizes individual stock risk, investors should also consider the actual holdings in the fund. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the financial sector – approximately 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 approximately 43.06% of total assets under management.

Since the beginning of the year, the Fidelity MSCI Financials Index ETF has gained about 0% so far and is up about 30.21% in the last 12 months (as of February 1, 2025). FNCL has traded between $52.62 and $73.31 over the last 52 weeks.

The ETF has a beta of 1.09 and a standard deviation of 19.57% for the most recent three-year period, making it a medium-risk choice in this space. With around 409 investments, company-specific risks are effectively spread.

The story continues