FESM: High-Beta SMID Portfolio With Worrisome Quality, Some Caution Is Needed
Source: SeekingAlpha
2025-03-03 06:44:58 ET
Summary
- FESM is an actively managed ETF offering exposure to financials- and industrials-heavy basket of SMID stocks. There is minor exposure to large caps as well.
- Since the conversion to an ETF in November 2023, FESM has been on a tear for quite some time, so it even beat IVV over December 2023 to January 2025.
- Still, it has been remarkably sensitive to the recent market softness as it trailed IVV and peers like IJR and IWM in February.
- The most likely culprit is the high beta of its portfolio paired with low quality (i.e., too large exposure to companies with weak margins, ROA, ROE, etc.).
- While the ETF demonstrated that it could capture a lot of upsides, I believe the combination of the high beta and imperfect quality means it is worth exercising caution.
Continuing my series of articles discussing ETFs that offer exposure to the SMID equity universe, today I would like to offer an assessment of the Fidelity Enhanced Small Cap ETF ( FESM )....
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FESM: High-Beta SMID Portfolio With Worrisome Quality, Some Caution Is Needed
Fidelity Enhanced Small Cap ETF
NASDAQ: FESM
FESM Trading
-0.74% G/L:
$38.03 Last:
347,067 Volume:
$37.83 Open:
