(FFSM) Fidelity Small-Mid Cap - Ratings and Ratios

The Fidelity® Small-Mid Cap Opportunities ETF (FFSM) is an actively managed exchange-traded fund that leverages an exemptive order from the Securities and Exchange Commission (SEC). This order permits the fund to maintain confidentiality regarding its complete portfolio holdings, allowing the portfolio managers to implement their investment strategy without daily disclosure. The fund typically allocates at least 80% of its assets to securities of companies with small to medium market capitalizations, defined as those similar in size to the constituents of the Russell 2500 Index. This focus provides exposure to companies that are often in growth phases but may offer more stability than smaller-cap firms. The fund also has the flexibility to invest in both U.S. and foreign issuers, broadening its potential opportunity set. As a non-diversified fund, it can take larger positions in individual securities, which may increase potential returns but also heightens concentration risk.

With assets under management (AUM) of $761.36 million, FFSM operates in the mid-cap blend ETF category, blending elements of both growth and value investing. The funds active management approach allows portfolio managers to selectively choose securities based on their assessment of a companys fundamentals, industry position, and market prospects. This flexibility is particularly valuable in the small to mid-cap space, where valuations can be more volatile and less efficient than in larger-cap markets. The funds ability to invest globally adds another layer of diversification, enabling it to capitalize on opportunities in both developed and emerging markets. However, its non-diversified status means that the fund may have fewer holdings compared to diversified funds, potentially leading to higher volatility in performance.

Looking ahead, the Fidelity® Small-Mid Cap Opportunities ETF is well-positioned to navigate the evolving small to mid-cap market landscape. Aswath Damodaran, a renowned expert in valuation and investment, would likely emphasize the funds potential to benefit from the active managements ability to identify undervalued or growth-oriented companies within this market segment. The funds AUM size is manageable, allowing for agility in adjusting portfolio positions without significant market impact. However, the funds success will depend on the skill of its managers in selecting companies that can deliver strong earnings growth or operational improvements. Additionally, the funds non-diversified nature and focus on smaller companies mean that investors should be prepared for higher volatility and the risks associated with concentration. Overall, FFSM offers a targeted approach to the small-mid cap segment, blending active management with strategic flexibility to capitalize on both domestic and international opportunities.