Should You Invest in the Fidelity MSCI Consumer Staples Index ETF (FSTA)?

This post was originally published on this site

Launched on 10/21/2013, the Fidelity MSCI Consumer Staples Index ETF (FSTA) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Staples – Broad segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $845.24 million, making it one of the larger ETFs attempting to match the performance of the Consumer Staples – Broad segment of the equity market. FSTA seeks to match the performance of the MSCI USA IMI Consumer Staples Index before fees and expenses.

MSCI USA IMI Consumer Staples Index represents the performance of the consumer staples sector in the U.S. equity market.

Costs

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 the least expensive product in the space.

It has a 12-month trailing dividend yield of 2.41%.

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 Consumer Staples sector–about 100% of the portfolio.

Looking at individual holdings, Procter + Gamble Co/the Common Stock (PG) accounts for about 14.90% of total assets, followed by Walmart Inc Common Stock Usd.1 (WMT) and Coca Cola Co/the Common Stock Usd.25 (KO).

The top 10 holdings account for about 63.26% of total assets under management.

Performance and Risk

The ETF has gained about 4.35% so far this year and is up roughly 29.89% in the last one year (as of 03/31/2021). In that past 52-week period, it has traded between $31.69 and $42.12.

The ETF has a beta of 0.63 and standard deviation of 18.79% for the trailing three-year period, making it a medium risk choice in the space. With about 99 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Consumer Staples Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FSTA is a reasonable option for those seeking exposure to the Consumer Staples ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $5.67 billion in assets, Consumer Staples Select Sector SPDR ETF has $11.18 billion. VDC has an expense ratio of 0.10% and XLP charges 0.12%.

Bottom Line

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Walmart Inc. (WMT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.