Best Fidelity ETFs to Buy
Fidelity Investments, commonly referred to as Fidelity, is one of the largest asset managers in the world. Beyond general investing advice and retirement planning, Fidelity also sells their own ETFs. The different ETFs include bonds, REITs, emerging markets, index composites, utilities and more. With as much broad exposure as these ETFs provide, it may be difficult to pinpoint the top options. So today we’ll look at five of the best Fidelity ETFs to buy.
No. 5 Fidelity MSCI Energy Index ETF (NYSE: FENY)
Fidelity’s Energy ETF has been Fidelity’s strongest performer in the past year. Comprised of the biggest oil and natural gas providers in the world, FENY has been one of the biggest winners period. Looking at the top holdings, the lowest one year return is Valero, with 56.21% returns as of April 22. It should be no surprise then that the fund returned 55.69% in 2021. And it’s up 38.6% year to date.
However, FENY has not been a strong performer over the past decade. The fund has consistently underperformed the returns of the underlying index. And the overall 10 year returns are lower. However, if exposure to oil and natural gas companies is your intent, this is the Fidelity ETF to pick. So even with lackluster performance year to date, FHLC is a solid option to start our list of Fidelity ETFs to buy.
No. 4 Fidelity MSCI Health Care Index ETF (NYSE: FHLC)
Another ETF which has underperformed the underlying index is Fidelity’s health care index ETF. FHLC is down over 7% year to date. Although, it returned an average of 20.16% over the previous three years. The fund is Fidelity’s third largest by net assets, at over $2.9 billion. It also has a four star rating from Morningstar, providing some strength to the ETF.
While it has underperformed the underlying index, FHLC is only marginally lower, and has essentially moved in parallel. The fund provides broad exposure to many sub sectors in the healthcare industry. This provides some intra-industry diversification. It’s not as top heavy as FENY, with the top two holdings only making up 16.4% of the portfolio.
No. 3 Fidelity MSCI Real Estate Index ETF (NYSE: FREL)
Another top performer over the past year, the Fidelity real estate index is Fidelity’s top real estate offering. FREL is one of Fidelity’s five biggest ETFs. It has a net assets over $2 billion. The ETF returned over 40% last year, but is down over 4% year to date, still outperforming broader markets. FREL also has a much lower expense ratio than ONEQ, at only 0.084%, about one third of ONEQ.
FREL has been largely unsuccessful at distinguishing its performance from the underlying index, marginally higher at this point. Morningstar also is fairly lukewarm to the fund, with a three star rating applied. Similar to Fidelity’s energy ETF, if exposure to a hot sector is your goal, this is the fund for you.
Keep reading for more on fidelity ETFs to buy.
No. 2 Fidelity Nasdaq Composite Index ETF (Nasdaq: ONEQ)
Fidelity’s Nasdaq composite is comprised of over 2000 companies. The fund has exposure to both domestic and foreign companies, though with a focus on domestic. With net assets of $4.5 billion, as of March 31, it is a reasonably large ETF. It also has an expense ratio of 0.21%. This means you’ll pay $21 for every $10,000 you invest. However, the stock is heavily weighted in tech, with over 21% of the fund in Apple and Microsoft stock.
While the ETF performed well in recent years, it has underperformed year to date. However, even including recent struggles, ONEQ has outperformed the Nasdaq over the past 10 years. In addition, the fund has a five star rating on Morningstar, providing strong industry support, making it a great addition to this list of fidelity ETFs to buy.
No. 1 Fidelity MSCI Information Technology Index ETF (NYSE: FETC)
And finally, to conclude this list of Fidelity ETFs to buy, is its information technology ETF. FETC is Fidelity’s largest ETF, with over $5.9 billion in net assets. It is also the second Morningstar five star rated fund on the list, despite underperforming the underlying index. For this reason, it is the top entry on our list of best Fidelity ETFs to buy.
FETC is down over 18% year to date, though it returned over 30% in 2021. It also returned 48.9 and 45.9% in 2020 and 2021, respectively. With an expense ratio of 0.084%, its fees won’t break the bank. Two of its top five holdings are Visa and Mastercard, providing some diversification from companies like Adobe and NVIDIA.
Conclusions
Having gone through the five best Fidelity ETFs to buy, some things stand out. Most of the ETFs have not outperformed the underlying index that it tracks. Whether that lends credence to Efficient Market Hypothesis, or implies Fidelity’s funds aren’t the highest quality, is unclear. What is clear is that the ETFs Fidelity provide offer exposure to many broad industries and sectors. If you are looking for ETFs to track an index, you could do worse than Fidelity’s offerings.