Fidelity Stocks for Inflation ETF

FCPI

Market cap $246M

The Fidelity Stocks for Inflation ETF seeks to provide exposure to stocks that benefit from rising inflation. FCPI has delivered solid historical performance but has underperformed the S&P 500 since inception. FCPI has provided a moderate degree of protection from rising inflation but lagged behind other inflation hedges during 2022.

The inflation story has been one of the defining narratives for U.S. markets in recent years. Though the Fed has put in a lot of effort trying to tame it, the challenge has grown potentially even more complex.

Is inflation really beaten? The recent June CPI print would suggest that it may be more persistent than anticipated.

FCPI offers a disciplined, inflation-focused strategy, blending quality, value, and momentum screens with a defensive sector tilt and attractive valuation. The fund is overweight in sectors resilient to inflation—consumer staples, healthcare, energy, and basic materials—while maintaining diversification and strong profitability metrics. FCPI has outperformed peers and the market during recent inflation spikes, with controlled volatility and a competitive expense ratio, though liquidity is lower than larger funds.

As inflation concerns continue to influence market dynamics in 2025 — especially after the most recent CPI print — investors are increasingly seeking equity-based strategies that can provide protection against rising prices. Several new and existing ETFs have emerged, each with distinct approaches to address inflation risk through sector exposure, asset allocation, and portfolio construction.

Inflation rates have steadily declined since peaking at 9.1% in June 2022, but the Fidelity Stocks For Inflation ETF has still managed to deliver solid returns. That's because FCPI only tilts towards inflation-friendly sectors like Energy and Materials, while tilting away from others like Consumer Discretionary and Technology. This setup promotes diversification away from mega-cap growth stocks and results in FCPI trading at only 15.07x forward earnings, a 24% discount over the iShares Russell 1000 ETF.

The Fidelity Stocks for Inflation ETF aims to address inflation risks, focusing on U.S. large- and mid-cap companies with attractive valuations and quality metrics. FCPI's portfolio shows resilience in consumer staples and healthcare, but faces uncertainty in energy and basic materials sectors. FCPI's valuation is attractive with a P/E ratio of 16.9x, a 21.7% discount to the Russell 1000, driven by sector allocations and stock selection.

During the high inflationary era of 2021-2023, FCPI excelled by generating 20% returns and outperforming the Russell 1000 peers by 3x. FCPI also compares very favorably against the actively managed alternative - INFL. We touch upon a few reasons why inflation risks have picked up again.

Inflation is back in the market narrative, with rising yields and Core CPI at 0.3% MoM, even before Trump's potentially inflationary policies take effect. Fidelity Stocks for Inflation ETF aims to benefit from inflation, with a diverse mix of large- and mid-cap U.S. stocks. FCPI has shown mixed performance, underperforming the S&P 500 overall but holding up better during high inflation periods like 2021 and 2022.

May marked the second consecutive month of cooling inflation numbers, but we clearly aren't out of the woods yet. The Consumer Price Index (CPI) was flat month over month and up 3.3% year over year, a slight drop from April's 3.4% year-over-year increase.