Should You Invest in the Fidelity MSCI Materials Index ETF (FMAT)?

The Fidelity MSCI Materials Index ETF (FMAT), a passively managed fund with $413.44 million in assets, seeks to track the MSCI USA IMI Materials Index and has an expense ratio of 0.08%. FMAT's top holdings include Linde Plc (16.95%), Sherwin Williams, and CRH Plc, with the top 10 holdings comprising 56.59% of the fund; the ETF is up 1.18% YTD but down 3.48% over the past year, and carries a Zacks ETF Rank of 3 (Hold).

Analysis

The Fidelity MSCI Materials Index ETF (FMAT), launched on October 21, 2013, offers passively managed exposure to the U.S. materials equity sector, tracking the MSCI USA IMI Materials Index. With assets under management (AUM) of $413.44 million, it is an average-sized ETF in its segment. A key attraction is its low annual operating expense ratio of 0.08%, positioning it as the least expensive product in its space, complemented by a 12-month trailing dividend yield of 1.69%. The Materials - Broad sector, to which FMAT provides exposure, is currently ranked 6th out of 16 Zacks sectors, placing it in the top 38%. The ETF's portfolio exhibits significant concentration, with the top 10 holdings accounting for 56.59% of total assets; Linde Plc (LIN) alone represents 16.95%. Performance as of May 26, 2025, shows a modest year-to-date gain of 1.18%, but a decline of 3.48% over the past year, with a 52-week trading range between $42.02 and $55.17. FMAT carries a beta of 1.07 and a standard deviation of 20.10% over the trailing three-year period, classifying it as a medium-risk investment. It holds approximately 107 securities, offering diversification against company-specific risk. Zacks assigns FMAT an ETF Rank of 3 (Hold), suggesting it is a sufficient option for investors. Alternative ETFs in the materials space include the Materials Select Sector SPDR ETF (XLB), which has a comparable expense ratio of 0.08% but substantially larger AUM of $4.74 billion, and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) with $4.69 billion in AUM and a higher expense ratio of 0.46%.

Key Decisions for Investors

• Investors seeking low-cost, diversified exposure to the U.S. materials sector may consider FMAT, particularly given its highly competitive expense ratio of 0.08% and its current Zacks 'Hold' rating.
• Significant holdings concentration, with Linde Plc at 16.95% and the top 10 holdings comprising 56.59% of assets, warrants careful monitoring for idiosyncratic risk, despite the fund holding approximately 107 securities.