FMAT vs FXZ

FMATAFidelity MSCI Materials Index ETF

FXZDFirst Trust Materials AlphaDEX Fund

In short

FMAT The whole US materials sector in one cheap wrapper: chemicals, industrial gases, miners and packagers, roughly 120 names spanning large down to small caps, for 0.08% a year. Fidelity has run it since 2013.

FXZ Most materials ETFs hand you the sector exactly as the market weights it. FXZ re-sorts it: the AlphaDEX rules rank Russell 1000 materials stocks on growth and value measures, then hold roughly 40 of them. Same sector, different shopping list.

Stated mandate

FMAT The fund seeks to provide returns that generally correspond, before fees and expenses, to the MSCI USA IMI Materials Index.

FXZ The fund seeks to track the performance of the StrataQuant® Materials Index, an equity index that applies the AlphaDEX® methodology to selected Russell 1000® materials-sector stocks.

Why people hold it

• FMAT Costs 0.08% a year, tied with XLB for the lowest fee among materials ETFs and a fraction of what the typical fund in the group charges.
• Tracks MSCI's investable-market index, so the basket reaches past the mega caps into mid and small caps: roughly 120 holdings, not a dozen giants.fidelity.com
• Does what the label says. Its returns have hugged its stated MSCI materials index, one of the stronger index implementations in its peer group.
• Live since 2013 with a multi-hundred-million-dollar asset base and quarterly distributions.

• FXZ Not a cap-weighted sector wrapper. The AlphaDEX screen ranks Russell 1000 materials names on growth and value measures and keeps roughly 40, so weight follows the screen rather than company size.ftportfolios.com
• In a sector where a handful of chemical and industrial-gas giants dominate cap-weighted funds, the rules push meaningful weight toward smaller and mid-sized materials companies.ftportfolios.com
• Running since 2007, which gives the methodology a long public track record across full commodity and rate cycles instead of a few years of backtest.

Worth knowing

• FMAT One sector, and a cyclical one. Materials profits ride commodity prices and industrial demand, so this can move a long way from the broad market in either direction.
• US-listed companies only, so the big Australian, Canadian and European miners sit outside the basket.fidelity.com
• Moderately traded rather than a volume leader, so spreads can run wider than at the busiest materials funds, especially in fast markets.

• FXZ Cost is the trade-off: 0.64% a year, one of the pricier options in the materials group, where the big cap-weighted funds (XLB, VAW, FMAT) charge single-digit basis points.
• A screened portfolio of roughly 40 names can behave quite differently from the plain materials sector in either direction. It tracks the StrataQuant Materials Index, not the sector everyone quotes.
• Trading is moderate rather than heavy, so spreads and order size matter more here than with the most heavily traded funds in the category. Distributions come quarterly.

Full FMAT profile⁠

Full FXZ profile⁠