FDEM vs FEMS

FDEMAFidelity Emerging Markets Multifactor ETF

FEMSDFirst Trust Emerging Markets Small Cap AlphaDEX Fund

In short

FDEM Value, quality, momentum and low-volatility screens run across emerging markets stocks, plus an unusual extra filter: a tilt toward names less correlated with US equities. Fidelity's in-house index, priced under the category median.

FEMS Emerging market small caps, chosen by First Trust's AlphaDEX growth-and-value rules instead of ranked by size. A narrow, off-the-beaten-path slice of EM that has been running since 2012.

Stated mandate

FDEM The fund seeks to track, before fees and expenses, the Fidelity Emerging Markets Multifactor Index.

FEMS The Fund seeks to track, before fees and expenses, the price and yield performance of the Nasdaq AlphaDEX® Emerging Markets Small CapTM Index.

Why people hold it

• FDEM Four factor screens (value, quality, momentum, lower volatility) and then a twist most multifactor rivals skip: the index also leans toward stocks with lower correlation to the US market.sec.gov
• At 0.25% a year, it undercuts the typical fund in the international multifactor group, where the median sits at 0.38%.
• Rules over hunches: normally at least 80% of assets sit in index securities, so the screens drive the portfolio. Live since 2019, with distributions paid quarterly.sec.gov

• FEMS Goes small in emerging markets: roughly 220 stocks, so no single name or state champion carries the fund.
• AlphaDEX picks and weights by growth and value rank, not market cap, so the biggest company in the index isn't automatically the biggest position.ftportfolios.com
• Live since 2012, with the same rules-based index mandate through multiple EM cycles. Pays quarterly.
• Holdings are spread widely enough that the portfolio reads as a genuine small-cap basket rather than a handful of bets.

Worth knowing

• FDEM Selective by design: a couple hundred large- and mid-cap names, not the full emerging markets universe, so results diverge from plain market-cap EM index funds.sec.gov
• Emerging markets carry currency, political and regulatory risk. A low-volatility screen aims to soften the ride relative to the broad EM market, not to remove the risk.sec.gov
• Volume is moderate rather than heavy for the category, so spreads deserve a look on larger orders. The developed-market sibling FDEV runs cheaper at 0.18%.

• FEMS Cost is the sore spot: 0.80% a year, well above EM factor peers such as EMGF (0.26%) and AVES (0.36%). That gap compounds against you.
• Thinly traded. Spreads can widen, and large orders can move the price more than in the big EM funds.
• Small caps plus emerging markets is a bumpy combination, and this has been among the more volatile funds in its peer group.

Full FDEM profile⁠

Full FEMS profile⁠