FDEM vs MFEM

FDEMAFidelity Emerging Markets Multifactor ETF

MFEMCPIMCO RAFI Dynamic Multi-Factor Emerging Markets Equity ETF

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.

MFEM Most multifactor emerging-market funds pick their factor weights and leave them. PIMCO's version rotates, leaning toward factors that look cheap against their own history and are turning up. Contrarian machinery from Research Affiliates, roughly 800 stocks deep.

Stated mandate

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

MFEM The Fund seeks to track the RAFI Dynamic Multi-Factor Emerging Markets Index. It normally invests at least 80% of assets in the index’s component securities and is designed to provide long-only emerging-market equity exposure across multiple factors.

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

• MFEM The index doesn't hold factor weights still. It rebalances toward factors with attractive relative valuations that are also showing a momentum upswing.rafi.com
• Four factors in one long-only emerging-market wrapper: value, momentum, quality and low volatility. No single-factor bet to time yourself.
• Roughly 800 holdings, so no single name carries the portfolio. Distributions come quarterly.
• A PIMCO fund running a Research Affiliates index, live since 2017. This is not a strategy that showed up last quarter.researchaffiliates.com

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%.

• MFEM At 0.50% it prices above the typical multifactor EM fund and above cheaper peers like EMGF (0.26%) and AVES (0.36%). Overall it lands in the lower half of its peer group.
• Thinly traded next to its category, which can mean wider spreads. Limit orders carry more weight here than with the group's heavyweights.
• Rotating factor weights is an active call baked into the index. The path can look quite different from plain cap-weighted emerging markets, in both directions.rafi.com

Full FDEM profile⁠

Full MFEM profile⁠