Fidelity Focuses On "Small" With Latest Active ETF Launches

Now, Fidelity has given investors more tools at perhaps just the right time.

The asset management giant recently expanded its active ETF lineup with four new strategies targeting small- and mid-cap equities, signaling both confidence in active ETFs as a category and conviction that the smaller end of the equity market may offer particularly fertile ground for active stock selection.

Fidelity remains one of the largest and most influential asset managers on the planet, with trillions in assets under management and custodianship. The firm built its reputation largely in the mutual fund era, becoming synonymous with active stock picking through flagship products and star managers. Today, it covers active equity, fixed-income, retirement solutions, wealth management, and index products.

However, like every major asset manager, Fidelity has had to adapt to the ETF revolution.

Its ETF lineup has grown meaningfully in recent years, spanning passive index funds, factor strategies, thematic offerings, actively managed equity funds, fixed-income ETFs, and alternative income products. Earlier this year, Fidelity expanded into the rapidly growing CLO ETF market, underscoring its willingness to innovate beyond traditional equities.

The latest launch builds on that momentum with four new actively managed equity ETFs: the Fidelity Enhanced Mid Cap Growth ETF (FEMG), Fidelity Enhanced Mid Cap Value ETF (FEMV), Fidelity Enhanced Small Cap Growth ETF (FSEG), and Fidelity Enhanced Small Cap Value ETF (FSEV).

The expense ratios are competitive by active standards, with the mid-cap offerings priced at 0.23% and the small-cap products at 0.28%. ¹

The four funds are considered active ETFs, but are not traditional, fully discretionary stock-picking products in the classic mutual fund mold. Instead, they use a systematic quantitative process, leveraging proprietary research, factor analysis, and portfolio construction techniques to identify opportunities. Also called enhanced indexing, this approach has managers taking an index and applying small active adjustments to the benchmark—such as value screens, balance sheet quality filters, or momentum and dividend yield scoring—to select stocks or bonds that tweak the index.

The idea is that these tweaks can consistently deliver just enough alpha to beat passive indexes.

While the enhanced indexing and systematic angle of the four funds underscores investor demand for active decision-making within a disciplined, repeatable framework, the real story may be Fidelity’s decision to go small. The asset manager’s expansion into small- and mid-cap equities comes at a particularly interesting moment.

For much of the last several years, mega-cap technology stocks dominated investor attention. The Magnificent Seven, AI enthusiasm, and concentration in large-cap growth have skewed major market indexes, leaving smaller stocks looking almost irrelevant as investors continued to favor larger equities.

Smaller stocks may now be having a moment.

Valuations across many small- and mid-cap segments remain meaningfully below large-cap counterparts, particularly relative to stretched mega-cap growth names. Investors increasingly worry that AI optimism has created concentration risk in broad cap-weighted benchmarks, where a handful of names drive outsized returns, leaving larger stocks with fewer future return prospects.

That dynamic has boosted the appeal of small- and mid-cap stocks, which today look like a better overall value than their larger counterparts.

Nonetheless, smaller stocks are not without risks. Smaller companies have historically performed well during economic recovery phases or periods of broadening market leadership, but today’s economic uncertainty, rising inflation, spiking Treasury yields, and other factors still make equity markets difficult to navigate.

This is a practical reason active management matters more today.

Since the Russell 2000 index launched in 1978, active small-cap managers have beaten the index 58% of the time over rolling 5-year monthly periods. More impressively, active managers outperformed 82% of the time during value-led periods like today, and the data tells a similar story for mid-cap stocks.

Ultimately, the launches could be a case of just the right product at just the right time.

For investors, the practical applications of Fidelity’s four new active ETFs are straightforward.

These products serve as dedicated style exposures for small- and mid-cap growth or value allocations, and they can complement broad core index positions by diversifying away from mega-cap concentration. Small- and mid-cap value may be particularly interesting given higher overall equity market valuations.

These ETFs also hold strong appeal for financial advisors as modular portfolio tools. By blending active management with ETF efficiency, they fit easily into model portfolios, tax-aware accounts, and diversified allocation frameworks.

To that end, these new ETFs could become hits for Fidelity and cement the next hot sector of active ETF growth—smaller firms.

These funds were selected for their ability to serve various segments of the small-cap space using active management, and are sorted by YTD total return, which ranges from 6% to 14%. Expenses range from 0.25% to 0.86%, assets under management from $6M to $11B, and yields from 0% to 1.6%.

Fidelity’s latest active ETF launch may look like just another product rollout, but it reflects something much bigger: active ETFs have officially moved from niche strategies to mainstream portfolio building blocks.

At the same time, investor attention is shifting toward areas where active management may have a stronger case, including the less efficient small- and mid-cap universe. By launching four systematic active ETFs targeting these segments, Fidelity is making a strategic bet on both trends at once.

Fidelity’s latest active ETF launch is about far more than four new funds. It reflects the continued evolution of active ETFs from niche investment tools into core portfolio building blocks, while highlighting growing investor interest in the underappreciated small- and mid-cap stock universe.

¹ Fidelity (April 2026). Fidelity Investments® Builds Out Active Enhanced ETF Suite with the Launch of Four Small, Mid Cap ETFs