Should you invest in the Fidelity MSCI Information Technology Index ETF (FTEC)?

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DDesigned to provide broad exposure to the Technology – Broad segment of the equity market, the Fidelity MSCI Information Technology Index ETF (FTEC) is a passively managed exchange-traded fund launched on 10/21/2013.

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.

Additionally, sector ETFs offer convenient ways to gain low-risk, diversified exposure to a broad group of companies in particular sectors. Technology – Large is one of 16 major Zacks sectors within the Zacks Industry classification. He is currently ranked 11, which puts him in the bottom 31%.

Index details

The fund is sponsored by Fidelity. It has amassed assets of over $7.18 billion, making it one of the largest ETFs attempting to match the performance of the Tech-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 US stock market.

Costs

Investors should also pay attention to an ETF’s expense ratio. Lower cost products will perform better than higher cost ones, assuming all other metrics remain the same.

The annual operating expense of this ETF is 0.08%, making it one of the cheapest products on the market.

It has a 12-month dividend yield of 0.63%.

Sector exposure and main holdings

Although ETFs provide diversified exposure, which minimizes single-stock risk, a thorough examination of a fund’s holdings is a valuable exercise. And most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the information technology sector, approximately 100% of the portfolio.

Looking at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL) accounts for approximately 18.91% of total assets, followed by Microsoft Corp Common Stock Usd.00000625 (MSFT) and Nvidia Corp Common Stock Usd.001 ( NVDA).

The top 10 holdings represent approximately 57.61% of total assets under management.

Performance and risks

Year-to-date, the Fidelity MSCI Information Technology Index ETF has lost ~-1.22% so far, and is up ~31.97% over the past 12 months (as of 01 /05/2022). FTEC has traded between $100.32 and $137.67 over the past 52-week period.

The ETF has a beta of 1.07 and a standard deviation of 27.44% for the three-year period, making it a medium-risk pick in the space. With approximately 348 holdings, it effectively diversifies company-specific risks.

Alternatives

The Fidelity MSCI Information Technology Index ETF has a Zacks ETF rating of 1 (Strong Buy), which is based on expected asset class return, expense ratio and momentum, among other factors. For this reason, FTEC is an exceptional option for investors looking to gain exposure to the technology ETF segment of the market. There are other additional ETFs in the space that investors might also consider.

Technology Select Sector SPDR ETF (XLK) tracks the Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks the MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $51.92 billion in assets, Vanguard Information Technology ETF has $56.08 billion. XLK has an expense ratio of 0.12% and VGT charges 0.10%.

Conclusion

To learn more about this product and other ETFs, research products that match your investment goals, and read articles about the latest developments in the ETF investment universe, please visit Zacks ETF Center.

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Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports

Apple Inc. (AAPL): Free Inventory Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

Technology Select Sector SPDR ETF (XLK): ETF Research Reports

Vanguard Information Technology ETF (VGT): ETF Research Reports

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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.

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