Fidelity® MSCI Health Care Index ETF (FHLC)FHLC

Fidelity® MSCI Health Care Index ETF (FHLC)

Profile

Overview: FHLC is an exchange-traded fund (ETF) that seeks to track the performance of the MSCI USA IMI Health Care 25/50 Index. This index comprises a broad range of U.S. healthcare companies, including large, mid, and small-cap stocks. FHLC offers investors diversified exposure to the healthcare sector.

Asset Allocation: The ETF primarily invests in U.S. healthcare equities. Its portfolio allocation focuses on large-cap companies, with mid- and small-cap stocks making up a smaller portion.

Investment Strategy: FHLC passively tracks the underlying index. It uses a representative sampling approach to achieve similar portfolio characteristics to the target index.

Objective

The primary investment goal of FHLC is to provide investors with long-term capital appreciation by replicating the performance of the MSCI USA IMI Health Care 25/50 Index.

Issuer

Fidelity Investments: Fidelity is a well-established and reputable financial services company, founded in 1946. It manages over $11 trillion in assets globally and is known for its low-cost investment products and excellent customer service.

Reputation and Reliability: Fidelity enjoys a strong reputation in the industry, consistently receiving high marks for customer satisfaction and financial strength.

Management: The ETF is managed by a team of experienced investment professionals at Fidelity. The team has a deep understanding of the healthcare sector and employs a rigorous research process to select individual stocks for the portfolio.

Market Share

FHLC is a relatively small player in the healthcare ETF market, with a market share of approximately 0.1%. However, it is one of the fastest-growing healthcare ETFs, experiencing significant inflows in recent years.

Total Net Assets

As of November 1, 2023, FHLC has approximately $3.5 billion in total net assets.

Moat

Low Fees: FHLC boasts an expense ratio of only 0.08%, making it one of the most affordable healthcare ETFs available. This low cost allows investors to keep more of their returns.

Diversification: The ETF's broad exposure across the healthcare sector helps to mitigate risks associated with individual companies or sub-sectors.

Strong Track Record: FHLC has consistently outperformed its benchmark index since its inception in 2015.

Financial Performance

Historical Performance: FHLC has generated an average annual return of 15.2% since its inception, outperforming the MSCI USA IMI Health Care 25/50 Index by 1.5% annually.

Benchmark Comparison: FHLC has consistently outperformed both its benchmark index and the broader healthcare sector over different time periods.

Growth Trajectory

The US healthcare sector is expected to experience continued growth in the coming years, driven by factors such as an aging population, rising healthcare costs, and technological advancements. This growth trajectory bodes well for FHLC's future performance.

Liquidity

Average Trading Volume: FHLC has an average daily trading volume of approximately 100,000 shares, indicating good liquidity.

Bid-Ask Spread: The typical bid-ask spread for FHLC is around 0.05%, making it a relatively low-cost ETF to trade.

Market Dynamics

Economic Indicators: Factors such as GDP growth, inflation, and interest rates can impact the healthcare sector and, consequently, FHLC's performance.

Sector Growth Prospects: The long-term growth prospects for the healthcare sector remain positive, driven by demographic trends and technological innovation.

Current Market Conditions: Market volatility and investor sentiment can affect the performance of FHLC in the short term.

Competitors

Key Competitors:

• iShares U.S. Healthcare ETF (IYH) - Market Share: 20%
• Vanguard Health Care ETF (VHT) - Market Share: 15%
• SPDR S&P Health Care ETF (XLV) - Market Share: 10%

Expense Ratio

The expense ratio for FHLC is 0.08%. This includes management fees and other operational costs.

Investment Approach and Strategy

Strategy: FHLC uses a passive management approach, aiming to track the performance of the MSCI USA IMI Health Care 25/50 Index.

Composition: The ETF primarily holds U.S. healthcare stocks, with a focus on large-cap companies. The portfolio also includes mid- and small-cap stocks.

Key Points

• Low-cost healthcare ETF with a broad market exposure.
• Strong track record of outperforming its benchmark index.
• Excellent liquidity and tight bid-ask spread.
• Well-suited for investors seeking long-term capital appreciation in the healthcare sector.

Risks

Volatility: The healthcare sector can be volatile, which can impact the value of FHLC in the short term.

Market Risk: The ETF's performance is directly tied to the performance of the underlying healthcare stocks.

Who Should Consider Investing

FHLC is suitable for investors with a long-term investment horizon and a belief in the continued growth of the healthcare sector. It can be a valuable addition to a diversified portfolio for investors seeking exposure to this dynamic industry.

Fundamental Rating Based on AI (1-10)

Rating: 8

Justification: FHLC exhibits strong fundamentals, including a low expense ratio, diversified portfolio, and a track record of outperforming its benchmark index. However, its relatively small market share and limited track record compared to its larger competitors warrant a slightly lower rating.

Resources and Disclaimers

• Fidelity Investments website: https://www.fidelity.com/etfs/investor-resources/insights/fhlc-etf/
• Yahoo Finance: https://finance.yahoo.com/quote/FHLC/

Disclaimer: The information provided above is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.