This is a US industrials sector ETF that tracks the MSCI USA IMI Industrials 25/50 Index's sibling, the MSCI Industrials 25/25 Index. It holds aerospace and defense, machinery manufacturing, transportation, construction, and commercial and professional services companies on a market-cap-weighted basis, providing broad exposure across the US industrials sector.

It suits investors who want to raise their industrials weighting during a US economic expansion, or who want concentrated industrials exposure as part of a sector rotation strategy.

Launched by Fidelity in 2013, it is a passively managed (index-tracking) ETF.

The fund tracks the MSCI Industrials 25/25 Index using a representative sampling approach. It holds industrials companies across the index in proportion to their market-cap weights, and applies the 25/25 diversification rule, which limits concentration in any single stock or group, to ease excessive concentration risk.

• Managed in-house by Fidelity, resulting in a relatively low expense level
• The 25/25 index rule eases single-stock and sector concentration

Assets under management (AUM) stand at $2.3B, and the expense ratio is 0.08% per year.

Compared with its industrials sector peer XLI, its expense level is somewhat lower, while its liquidity is more limited than that of larger ETFs given Fidelity's fund structure.

Because the industrials sector is closely tied to the US economic cycle, it tends to perform relatively well when infrastructure investment is expanding or manufacturing is recovering. Rising defense demand and the reshoring of domestic manufacturing have also had a positive effect on the sector as a whole.

As an industrials sector ETF, it tends to see rising inflows when expectations of economic expansion increase. On the other hand, outflows can occur during periods of recession fears or sharp interest rate increases. As one of Fidelity's series of sector ETFs, it also draws demand from sector rotation capital.

Its strengths are a low expense level and broad diversification across the industrials sector, while its weaknesses are high sensitivity to the economic cycle and limited liquidity.

The comparison ETFs shown in the table are FDN (internet and communications sector) and FNCL (financials sector) from Fidelity's sector series. They cover sectors other than industrials, so their strategic character differs. ETFs that can be compared directly within the same industrials sector include the larger XLI (State Street industrials sector) and Vanguard's VIS, both of which cover US industrials broadly. For concentration in a specific subsector, you can also consider the transportation-focused IYT and PRN, which includes small-cap industrials.

These are the key points to verify before investing in FIDU. Because it concentrates on the industrials sector, it is important to check in advance its sensitivity to the economic cycle, expense level, and liquidity.

The industrials sector is sensitive to the economic cycle, so downward pressure can hit the whole portfolio during a recession. Changes in defense and trade policy can also affect major holdings at the same time, so periodic monitoring is needed.

This is an ETF to consider if you want diversified exposure to the US industrials sector at a low expense level. If you need greater liquidity, XLI can be an alternative, and if you prefer the Vanguard family, VIS can be one.