FESM: Not Impressed With This Enhanced Small Cap Blend ETF

Summary

• FESM recently reorganized into an ETF with a 0.28% expense ratio, but this enhanced small-cap fund has an extensive track record dating back to December 2007.
• This analysis reveals returns that were better than Russell 2000 Index ETFs like IWM but worse than S&P SmallCap 600 Index ETFs like SPSM.
• The strategy supposedly improves the quality of the Russell 2000 Index, but I found the improvements negligible. However, its value and growth features are impressive, albeit could be temporary.
• Overall, I'm not too impressed with FESM. While it's superior to IWM, it's a pretty low bar, and this article lists several other small-cap blend ETFs you should consider first.

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Investment Thesis

The Fidelity Enhanced Small Cap ETF (NYSEARCA:FESM) launched on November 20, 2023, but its predecessor mutual fund has an extensive track record dating back to December 2007. With a reasonable 0.28% expense ratio and strengths in

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.