At a glance
FESM charges 0.28% a year, above the 0.08% average of the 4 funds most like it (the most expensive of 5). It has $5.78B in assets, the 5th largest of that group; it paid 0.63% of its price in distributions over the past 12 months, semiannual. Over the past year it returned +21.7% with distributions reinvested (S&P 500: +11.5%), the best of those 5 funds. Its ten largest positions make up 8.0% of the fund, out of 783 in all.
The short version
Fidelity Enhanced Small Cap ETF (FESM) picks about 780 stocks from the Russell 2000 Index, a benchmark of smaller US companies. Instead of copying the index, it uses a computer-driven model built on factors such as valuation, growth and quality, aiming to beat it. The trade-off is cost: its 0.28% expense ratio is several times the 0.03% to 0.06% charged by broad small-cap index funds such as SPSM and IJR.
Price history
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FESM +21.7% over the year to Oct 27, 2026, total return with distributions reinvested.
How it has behaved
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | Since start | |
|---|---|---|---|---|---|---|
| FESM official prospectus, to Oct 30, 2026 | — | +17.70% | — | +10.33% | +10.62% | — |
| RS002 index, same period | — | +12.81% | — | +6.09% | +9.62% | — |
| RS003 index, same period | — | +17.15% | — | +13.15% | +14.29% | — |
| FESM price data to Oct 27, 2026 | +21.5% | +21.7% | — | — | — | +23.7% |
- Over the year to Oct 27, 2026, FESM returned +21.7%, 1st of 5 among similar funds.
- Its worst full calendar year was 2024 (+16.2%); its best was 2025 (+17.9%).
- The deepest fall in its price history was 26.9% (Dec 2, 2024 to Apr 8, 2025), recovered by Aug 27, 2025.
Show as a table
| Year | Price data | Prospectus (official) |
|---|---|---|
| 2026 (to date) | +21.5% | — |
| 2025 | +17.9% | +17.70% |
| 2024 | +16.2% | +16.48% |
| 2023 | — | +21.04% |
| 2022 | — | -18.28% |
| 2021 | — | +20.54% |
| 2020 | — | +18.53% |
| 2019 | — | +23.65% |
| 2018 | — | -13.04% |
| 2017 | — | +7.22% |
| 2016 | — | +22.84% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Before this security existed |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Before this security existed |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Before this security existed |
Dividends and income
Show as a table
| Year | Per share | Change |
|---|---|---|
| 2026 (to date) | $0.2050 | |
| 2025 | $0.3100 | -11.4% |
| 2024 | $0.3500 |
What's inside
As of Jun 30, 2026, the fund held 783 securities; the ten largest made up 7.97% of assets. It also reported 5.5% in a money-market fund, most likely cash collateral from lending out shares rather than uninvested money.
| Holding | Weight | |
|---|---|---|
| GUARDANT HEALTH INC | 1.09% | |
| MAXLINEAR INC | 0.96% | |
| ACM RESEARCH INC | 0.90% | |
| KULICKE and SOFFA INDUSTRIES INC | 0.78% | |
| ENERSYS | 0.76% | |
| TENABLE HOLDINGS INC | 0.76% | |
| PLEXUS CORP | 0.72% | |
| KODIAK GAS SERVICES INC | 0.71% | |
| EXTREME NETWORKS INC | 0.65% | |
| HEALTHEQUITY INC | 0.65% | |
| PHILLIPS EDISON and CO INC | 0.64% | |
| AXSOME THERAPEUTICS INC | 0.63% | |
| TUTOR PERINI CORP | 0.61% | |
| GRIFFON CORP | 0.61% | |
| GLACIER BANCORP INC | 0.61% |
By country
United States 93.41%Bermuda 1.17%Canada 0.92%Cayman Islands 0.87%Ireland 0.71%By asset type
Stocks 98.1%Bonds and notes 0.61%Preferred stock 0.01%What changed recently
- Over the three months to Jun 30, 2026, investors added a net $522.9M (creations minus redemptions, per the N-PORT report).
- Monthly total returns reported for that quarter: +14.36%, +4.76%, +6.15%.
How it works
The fund normally puts at least 80% of its assets in common stocks that are in the Russell 2000 Index. That index is market-cap weighted, so bigger companies count for more, and it measures the small-company slice of the US stock market. Derivatives (contracts whose value tracks those stocks) also count toward the 80%. Fidelity doesn't simply mirror the index. Its team uses research on long-term drivers of stock returns, such as valuation, growth and quality. It applies that research systematically through its own portfolio-building and risk-control framework. The goal is a broadly diversified portfolio that may earn more than the index.
In practice, that means many small tilts rather than a few big bets. As of June 30, 2026, the fund held 783 stocks, and the 10 largest made up just 7.97% of assets. Guardant Health was the biggest at about 1.1%. MaxLinear, ACM Research, Kulicke and Soffa, and EnerSys followed, each under 1%. About 93% was in US-based companies. A Russell 2000 futures contract made up about 0.04%.
Turnover was 54%, meaning the fund replaced roughly half its portfolio during the year. Trading costs from that turnover are not part of the expense ratio. The 5.5% cash figure likely reflects collateral from lending securities, not a bet on cash. One risk is specific to this approach: the model's factors can stop working.
What it really costs
- FESM charges 0.28% a year, versus an average of 0.08% for the similar funds below (5th of 5, cheapest first).
- Using the prospectus's standard example, $10,000 invested would cost about $29 in the first year and $356 over 10 years (assuming a 5% annual return).
| Cost of $10,000 (SEC example) | 1 yr | 3 yrs | 5 yrs | 10 yrs |
|---|---|---|---|---|
| FESM | $29 | $90 | $157 | $356 |
In a retirement portfolio
It is a higher-cost, actively tilted small-company stock fund with large swings and a short record, so it fits better alongside a core holding than as one.
FESM could add exposure to smaller US companies, which often behave differently from the large firms that dominate most stock funds. It launched on November 20, 2023, so it has no record through the 2008, 2020 or 2022 downturns. Its deepest drop so far was 26.9%, from December 2, 2024, to April 8, 2025. It recovered by August 27, 2025, about 4.6 months later. Its one-year beta of 1.15 means it moved somewhat more than the market. Anyone who may need to sell shares in a bad year should be ready for swings at least that large. Income is small: the trailing yield was 0.63% as of October 27, 2026, paid twice a year. In the SEC's standard example, $10,000 costs $29 in year one and $356 over 10 years. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.
Who it may suit — and who should look elsewhere
May suit
- Investors who want small-company stocks plus a quantitative attempt to beat the Russell 2000, and who accept paying 0.28% a year for it.
- Those who want wide diversification: 783 stocks as of June 30, 2026, and no single holding above about 1.1% of assets.
- Long-term holders who can live with drops like its 26.9% fall from December 2024 to April 2025, which took about 4.6 months to recover.
Look elsewhere if
- Cost-focused investors: SPSM charges 0.03% and IJR 0.06%, compared with FESM's 0.28%, the highest among its four closest peers.
- People who need income: the trailing yield was 0.63% as of October 27, 2026, and it pays only twice a year.
- Anyone who wants a long track record: the fund launched in November 2023 and has no history through the 2008, 2020 or 2022 downturns.
Close alternatives
Matched by holdings overlap from the latest N-PORT reports.
| Fund | Overlap | Cost | Net assets | 1 yr | 3 yr |
|---|---|---|---|---|---|
| FESM this fund | — | 0.28% | $5.78B | +21.7% | — |
| SPSM SPDR Portfolio S&P 600 Small Cap ETF | 29% | 0.03% | $16.92B | +21.7% | +17.4% |
| IJR iShares Core S&P Small-Cap ETF | 28% | 0.06% | $111.32B | +21.7% | +17.4% |
| SCHA Schwab U.S. Small-Cap ETF | 21% | 0.04% | $22.65B | +19.1% | +20.0% |
| IJS iShares S&P Small-Cap 600 Value ETF | 21% | 0.18% | $8.02B | +18.8% | +19.1% |
Questions investors ask
Is FESM an index fund?
No. FESM picks its stocks from the Russell 2000 Index, but it doesn't try to match it. Fidelity uses a quantitative model that looks at factors such as valuation, growth and quality to choose and weight about 780 stocks. The aim is a higher total return than the index. That approach brings more trading, with 54% turnover. It also carries a risk that index funds don't: the model's factors can perform worse than the market.
What's the difference between FESM and IJR?
IJR, the iShares Core S&P Small-Cap ETF, tracks an S&P small-cap index at a 0.06% expense ratio. FESM uses a model to pick Russell 2000 stocks and charges 0.28%. Only about 28% of their holdings overlap. IJR is far larger, with $111.3 billion in net assets against FESM's $5.8 billion as of June 30, 2026. Over one year, FESM returned 21.7% as of October 27, 2026. IJR returned 21.0% as of October 29.
Does FESM pay dividends?
Yes, but the payouts are small. FESM pays dividends twice a year. Over the 12 months to October 27, 2026, it paid about $0.29 per share, a trailing yield of 0.63%. That's typical of a fund that holds small, growing companies, many of which pay little or no dividend. Investors who want regular income from their portfolio usually rely on other holdings for it.
What is FESM's expense ratio?
FESM's expense ratio is 0.28%, according to its prospectus filed October 27, 2026. That is well above the 0.08% average of its four closest peers, and it ranks as the most expensive of the five. Under the SEC's standard example, $10,000 invested with a 5% annual return would cost $29 after one year, $157 after five years and $356 after 10 years.
How has FESM performed since it launched?
FESM's returns have been strong but bumpy. The prospectus shows gains of 16.48% in 2024 and 17.7% in 2025. In 2026 it gained 21.5% through October 27, and its one-year return was 21.7% as of that date. Along the way it fell 26.9% between December 2, 2024, and April 8, 2025, before recovering by August 27, 2025. Its record covers less than three years, and past results don't predict future returns.