Fidelity launches Fundamental Small-Mid Cap ETF (FFSM)

Fidelity Fundamental Small‑Mid Cap ETF (FFSM) debuted this week, offering investors exposure to U.S. small- and mid-cap companies through a rules-based approach that weights holdings by company fundamentals rather than by market capitalization.

The fund aims for long-term capital appreciation by tracking a fundamentally weighted index of U.S.-listed companies that meet the fund’s size and liquidity criteria. Selection and weighting use company data such as revenues, cash flow, dividends and share repurchases as inputs.

FFSM follows a scheduled rebalancing process defined in its governing documents to update weights and holdings based on the latest fundamental data. Holdings are limited to firms within Fidelity’s small- and mid-cap ranges and cover multiple sectors.

Trading details, fees, permitted instruments and operational procedures are disclosed in the ETF’s prospectus. Fidelity will serve as investment manager and the prospectus describes in-kind creation and redemption processes typical of exchange-traded funds.

The prospectus states the fund seeks “long-term capital appreciation through a portfolio of U.S. small- and mid-cap companies selected and weighted based on company fundamentals.” The filing lists risks including higher volatility and lower liquidity for smaller companies and sets out the fund’s eligibility rules and turnover policy.

Fundamental indexing allocates portfolio weight using company financial measures instead of market prices. FFSM joins other funds that offer small- and mid-cap exposure under that approach.