Fidelity® MSCI Health Care Index ETF (FHLC)

ETF Fidelity® MSCI Health Care Index ETF (FHLC) Overview:

Profile:

FHLC is an ETF that tracks the performance of the MSCI USA IMI Health Care 25/50 Index, offering exposure to a diversified basket of US healthcare companies. It invests in large, mid, and small-cap stocks across various healthcare sub-industries, including pharmaceuticals, biotechnology, medical devices, and healthcare services.

Objective:

The primary objective of FHLC is to provide investors with long-term capital appreciation by closely tracking the performance of the underlying index.

Issuer:

Fidelity Investments:

• Reputation and Reliability: Fidelity is a highly reputable and reliable financial institution with a long history dating back to 1946. It is known for its strong track record in mutual funds and ETFs, managing over $4.2 trillion in assets.
• Management: Fidelity has a team of experienced portfolio managers and analysts overseeing its ETF products, ensuring sound investment decisions and effective portfolio management.

Market Share:

FHLC has a market share of approximately 0.5% within the healthcare ETF sector.

Total Net Assets:

As of November 10, 2023, FHLC has total net assets of approximately $4.5 billion.

Moat:

• Low Fees: FHLC has an expense ratio of 0.08%, making it one of the most cost-effective healthcare ETFs available.
• Diversification: The ETF's broad exposure across various healthcare sub-industries mitigates sector-specific risks and offers diversification benefits.
• Replicating Index: FHLC tracks a well-established and widely recognized index, providing investors with transparency and predictability.

Financial Performance:

• Historical Performance: FHLC has delivered strong historical returns, outperforming the broader market over the past 3, 5, and 10 years.
• Benchmark Comparison: FHLC has consistently outperformed its benchmark index, demonstrating its effectiveness in tracking the underlying index and generating alpha.

Growth Trajectory:

The healthcare sector is expected to experience continued growth due to factors such as an aging population, increasing healthcare spending, and technological advancements. This bodes well for FHLC's future growth prospects.

Liquidity:

• Average Trading Volume: FHLC has an average daily trading volume of approximately 1.5 million shares, indicating reasonable liquidity.
• Bid-Ask Spread: The bid-ask spread for FHLC is typically tight, suggesting low transaction costs for investors.

Market Dynamics:

• Economic Indicators: Strong economic growth and rising disposable income can positively impact the healthcare sector.
• Sector Growth Prospects: Continued technological advancements and favorable demographics are expected to drive sector growth.
• Market Conditions: Overall market volatility and fluctuations in interest rates can impact the ETF's performance.

Competitors:

• iShares U.S. Healthcare ETF (IYH): Market Share: 35%
• Vanguard Health Care ETF (VHT): Market Share: 25%
• SPDR S&P Health Care Sector ETF (XLV): Market Share: 15%

Expense Ratio:

FHLC has an expense ratio of 0.08%, which is significantly lower than the average expense ratio for healthcare ETFs.

Investment Approach and Strategy:

• Strategy: FHLC passively tracks the MSCI USA IMI Health Care 25/50 Index, aiming to replicate its performance.
• Composition: The ETF primarily invests in US healthcare stocks, including large, mid, and small-cap companies.

Key Points:

• Low-cost and diversified exposure to the US healthcare sector.
• Strong historical performance and outperformance against benchmark.
• Potential for future growth due to favorable sector outlook.
• Reputable issuer with a proven track record.

Risks:

• Market Risk: FHLC is subject to market fluctuations and sector-specific risks associated with the healthcare industry.
• Volatility: The healthcare sector can experience periods of high volatility, impacting the ETF's performance.
• Tracking Error: While FHLC aims to track the index closely, there may be instances of tracking error.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to the US healthcare sector.
• Investors looking for a low-cost and diversified healthcare ETF.
• Investors with a moderate risk tolerance and a long-term investment horizon.

Fundamental Rating Based on AI (1-10):

Rating: 8/10

FHLC receives a high rating based on its strong financial performance, competitive advantages (low fees, diversification, index replication), and growth potential. However, it is essential to consider the inherent risks associated with the healthcare sector and market volatility before making investment decisions.

Resources and Disclaimers:

• Fidelity Investments Website: https://www.fidelity.com/etfs/overview/fhcl
• MSCI Website: https://www.msci.com/us/
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.