Similar Sector ETFs Not Built The Same

June 15, 2017

Charts courtesy of StockCharts.com

 

Fidelity Sector Suite Growing

Though the three largest ETF providers currently control 82% of total ETF assets, Fidelity has gathered nearly $5 billion in assets across its 11 sector ETFs since launching the series in October 2013. Fidelity sector products are similar to Vanguard’s—inclusive of large-, mid- and small-cap stocks within a sector—but currently charge 2 basis points less.

The Fidelity MSCI Information Technology Index ETF (FTEC) is the largest, at $963 million in assets, aided by $250 million of net inflows in the first five months of 2017.

Fidelity’s sector ETFs are not share classes of mutual fund portfolios and, as such, investors in FTEC will have a different experience than they would if they with Fidelity Select Technology Portfolio (FSPTX). For example the mutual fund holds some consumer discretionary stocks such as Tesla in addition to Apple and Facebook.

Other Industry/Sector Offerings

In addition, through products such as the First Trust Nasdaq Bank ETF (FTXO), the PowerShares Aerospace & Defense Portfolio (PPA) and the VanEck Vectors Retail ETF (RTH), investors have at least three ETFs to consider once they identify a sector or industry they think can outperform.

Rather than just selecting Fifth Third Bancorp, Northrop Grumman or Target, through CFRA hold recommendations, investors could use the above or peer ETFs to get a taste of what’s on the industry menu and gain exposure to what CFRA thinks are other more attractively value constituents.

At the time of writing, neither the author nor his firm held any of the securities mentioned. Todd Rosenbluth is director of ETF and mutual fund research at CFRA, an independent research firm that acquired S&P Global Market Intelligence's equity and fund business in October 2016. He can be reached at [email protected]. Follow him at @ToddCFRA.

 

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