Fidelity Fundamental Small-Mid Cap ETF

FFSM

Market cap $1.46B

VettaFi's Midyear Market Outlook symposium Thursday saw industry leaders take on the big questions. Where is the market going?

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research, Todd Rosenbluth, discussed the Fidelity Fundamental Small-Mid Cap ETF (FFSM) with Chuck Jaffe of Money Life. The pair discussed several topics related to the ETF, in order to give investors a deeper understanding of it.

VettaFi's Head of Research Todd Rosenbluth discussed the Fidelity Fundamental Small-Mid Cap ETF (FFSM) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and strategy, visit the ETF Investing Content Hub.

Beyond the Mega Caps: Advisors Eye Small- and Mid-Cap Strategies The strong run by the Nasdaq-100 and the S&P 500 the last few years has loaded portfolios with heavy concentration risk. As a tiny group of mega cap tech giants shapes the market, finding meaningful diversification has become a priority for advisors.

Fidelity Fundamental Small-Mid Cap ETF earns a 'Buy' rating based on its strong recent momentum, superior risk-adjusted returns versus passive benchmarks, and attractive valuation. FFSM's active management and diversified holdings position it to benefit if market leadership broadens beyond mega-cap technology stocks. While FFSM has a higher expense ratio (0.43%) and weak dividend profile, its risk-adjusted outperformance and growth/value blend justify its use as a satellite allocation.

Active ETFs continue to experience explosive industry growth, and Fidelity is positioning itself as a leader. Fidelity has been long known for its fundamental stock-picking based active strategies, built on a rich heritage of deep company research.

Fidelity Fundamental Small-Mid Cap ETF is an active, non-transparent vehicle with a strategy bringing together quantitative and fundamental methods. FFSM is beating IVV this year amid the capital rotation. Moreover, it has outperformed a few SMID vehicles, including IJH and SMMD since the strategy change in 2024. Besides, its portfolio has a few advantages over that of IJH in terms of growth (including GARP) and momentum characteristics.

Fidelity Fundamental Small-Mid Cap ETF offers active small- and mid-cap exposure but lacks daily portfolio transparency, with a moderate 0.43% fee and low 0.7% yield. Performance has improved recently, but FFSM still trails my preferred ETF - EZM - in risk-adjusted returns and value allocation. FFSM's short track record and mixed results led me to assign a Hold rating, favoring EZM for my portfolio.

After a strong 2024, Fidelity ETFs gathered approximately $10 billion in the first four months of 2025. Demand for actively managed products has been a key driver as Fidelity leans further into the ETF market.

One month into 2025, and ETFs are already off to the races, hauling in over $100 billion in net inflows in January. Hefty gains across the board reflect continued bullish sentiment on the stock market overall.