ETF Evaluator: Fidelity Enhanced Small Cap Core ETF () Follow This ETF

Fidelity Enhanced Small Cap Core ETF Overview

Fidelity Enhanced Small Cap Core ETF (FESM) is an actively managed U.S. Equity Small Blend exchange-traded fund (ETF). Fidelity Investments launched the ETF in 2007.

The investment seeks capital appreciation. The fund will normally invest at least 80% of assets in common stocks included in the Russell 2000® Index, which is a market capitalization-weighted index designed to measure the performance of the small-cap segment of the U.S. equity market. The adviser will generally utilizing a research-driven approach identifying long-term drivers of stock returns that may include,but are not limited to, valuation, growth, quality, and other factors.

About Fidelity Enhanced Small Cap Core ETF (FESM)

There are 3 members of the management team with an average tenure of 7.17 years: Anna Mitelman-Lester (2019), George Liu (2023) and Shashi Naik (2014). Management tenure is more important for actively managed ETFs than passive index ETFs.

The ETF has 2 primary benchmarks: Russell 3000 TR USD index with a weighting of 100% and Russell 2000 TR USD index with a weighting of 100%. Fidelity Enhanced Small Cap Core ETF has 865 securities in its portfolio. The top 10 holdings constitute 10.8% of the ETF’s assets. The ETF meets the SEC requirement of being classified as a diversified fund. The ETF is not considered to have an ESG focus with its investment selection and management.

Fidelity Enhanced Small Cap Core ETF is part of the Equity global asset class and is within the U.S. Equity ETF group. Fidelity Enhanced Small Cap Core ETF has 1.3% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 96.6% There is 1.3% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 0.0% (0.0% domestic bond, 0.0% foreign bond and 0.0% convertible bond). Fidelity Enhanced Small Cap Core ETF has 5.9% of the portfolio in cash.

Assets Under Management

The fund has $6 billion in total assets, which is above the $4 billion average for the Small Blend category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

FESM Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The Fidelity Enhanced Small Cap Core ETF expense ratio is below average compared to funds in the Small Blend category. Fidelity Enhanced Small Cap Core ETF has an expense ratio of 0.28%, which is 34% lower than its category average, making the fund expense ratio grade a B. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. Fidelity Enhanced Small Cap Core ETF has a portfolio turnover rate of 73%, which indicates that it holds its assets around / 0.0 years. By way of comparison, the average portfolio turnover is 50% for the Small Blend category.

Recently, in the month of July 2026, Fidelity Enhanced Small Cap Core ETF returned -3.3%, which earned it a grade of D, as the Small Blend category had an average return of -2.1%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all ETFs in that category.

Fidelity Enhanced Small Cap Core ETF has a trailing yield of 0.73%, which is below the 1.17% category average. The fund normally distributes its income quarterly and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

Fidelity Enhanced Small Cap Core ETF Grades

Year to date, the ETF has returned 24.2%, 6.2 percentage points better than the category, which translates into a grade of A. The fund has returned 43.8% over the past year (grade of A), 20.8% over the past three years (grade of A) and 11.7% per year over the past five years (grade of A) and 12.3% per year over the past 10 years (grade of A).

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