Should You Invest in the Fidelity MSCI Information Technology Index ETF (FTEC)?
Launched on 10/21/2013, the Fidelity MSCI Information Technology Index ETF (FTEC) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology – Broad segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Fidelity. It has amassed assets over $5.31 billion, making it one of the largest ETFs attempting to match the performance of the Technology – Broad segment of the equity market. FTEC seeks to match the performance of the MSCI USA IMI Information Technology Index before fees and expenses.
The MSCI USA IMI Information Technology Index represents the performance of the information technology sector in the U.S. equity market.
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.86%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector–about 99.90% of the portfolio.
Looking at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL) accounts for about 22.40% of total assets, followed by Microsoft Corp Common Stock Usd.00000625 (MSFT) and Nvidia Corp Common Stock Usd.001 (NVDA).
The top 10 holdings account for about 60.22% of total assets under management.
Performance and Risk
The ETF has lost about -26.74% so far this year and is down about -3.16% in the last one year (as of 05/13/2022). In that past 52-week period, it has traded between $99.81 and $137.67.
The ETF has a beta of 1.11 and standard deviation of 29.57% for the trailing three-year period, making it a medium risk choice in the space. With about 366 holdings, it effectively diversifies company-specific risk.
Fidelity MSCI Information Technology Index ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FTEC is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Technology Select Sector SPDR ETF (XLK) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $39.29 billion in assets, Vanguard Information Technology ETF has $41.15 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.