Investing in an Economic Recovery with Fidelity MSCI Industrials ETF

This member of the Kiplinger ETF 20 holds more than 330 stocks, including top weightings in railroad Union Pacific and United Parcel Service.

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If you believe in America’s ability to recover from the one-two punch of the pandemic and ensuing recession, you should have faith in the industrial sector. Railways, large-equipment manufacturers, delivery services and the like are poised to wake from their 2020 slumber. The industrial sector suffered a 6.9% loss through the end of October, but then bounced higher on hopes of a vaccine-propelled rebound in economic growth and possibly increased infrastructure spending.

Fidelity MSCI Industrials Index ETF (FIDU), a member of the Kiplinger ETF 20 list of our favorite ETFs, isn’t the oldest fund invested in the sector, nor is it the largest. But charging just $8 annually for each $10,000 invested, it is the cheapest. And that eight bucks a year buys you a robust, diversified portfolio. FIDU holds more than 330 stocks, including top weightings in railroad Union Pacific (UNP), diversified conglomerate Honeywell (HON) and United Parcel Service (UPS).

Many holdings are large, global operators that could enjoy the benefits of economic snapbacks across the world, especially in resurgent China. However, FIDU could be an especially potent performer as the U.S. economy gets back on track. Midsize and small companies, which are likely to derive more of their revenues domestically, make up a larger percentage of the Fidelity fund’s portfolio than they do in many of its biggest competitors. The tilt toward smaller companies provides a “growthier” edge for the ETF, which nonetheless offers investors below-average risk, according to investment research firm Morningstar.

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Graphic of performance metrics for Fidelity MSCI Industrials Index ETF

As of November 6. *Assumes reinvestment of dividends and capital gains. —Not applicable; fund not in existence for the entire period. Sources: Direxion, Morningstar, Yahoo Finance.
Kyle Woodley

Kyle Woodley is the Editor-in-Chief of WealthUp, a site dedicated to improving the personal finances and financial literacy of people of all ages. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.

Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism. 

You can check out his thoughts on the markets (and more) at @KyleWoodley.