Fidelity Stocks for Inflation ETF

FCPI

Market cap $275M

FCPI is marketed as an "inflation-friendly" ETF, but it's actually an extremely strong multi-factor fund in disguise. This article proves that by presenting a comprehensive set of its latest fundamentals. Its Index follows a rules-based approach twice-annually to tilt toward certain sectors and industries thought to perform well in inflationary environments, including Energy, Consumer Staples, and Railroads. However, active sector/industry risk is limited to just 5%, so while this might limit extraordinary short-term gains, it also has a strong track record of limiting long-term losses.

An inflation ETF designed to weather rising prices is drawing fresh attention after consumer inflation surged to 3.3% in March. This was the highest level in nearly two years, driven almost entirely by a record 21.2% monthly jump in gasoline prices.

Fidelity Stocks for Inflation ETF offers exposure to about 100 stocks selected using demanding factor screening, with emphasis put on sectors and industries benefiting from inflation. Despite performing excellently in 2021–2022, since its inception in 2019, FCPI has been unable to deliver consistent alpha, lagging IVV and IWB. Risk-adjusted returns were not appealing enough either. The FCPI portfolio's current factor mix is solid, with stronger growth and quality characteristics than IVV's, as well as a GARP tilt.

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.