FSMD vs VYM

FSMDAFidelity Small-Mid Multifactor ETF

VYMAVanguard High Dividend Yield ETF

In short

FSMD Most multifactor ETFs run their screens on the biggest US companies. FSMD points the same four lenses (cheap, high-quality, trending, calmer) at small and mid-cap America, and charges 0.15% a year to do it.

VYM The no-frills dividend workhorse. VYM buys the higher-yielding end of the US market, roughly 600 names, for four basis points: no quality screen, no dividend-growth-streak test, just yield, at scale since 2006.

Stated mandate

FSMD Seeks to track, before fees and expenses, the Fidelity Small-Mid Multifactor Index by normally investing at least 80% in its securities. The index covers small- and mid-capitalization U.S. companies selected for attractive valuations, high quality, positive momentum, and lower volatility than the broader market.

VYM The Fund seeks to track a benchmark index measuring the investment return of common stocks from companies characterized by high dividend yields.

Why people hold it

• FSMD 0.15% a year, well under the typical fee in the multifactor aisle. Less cost drag means the factor tilt has a smaller hurdle to clear.
• Four screens working together (value, quality, momentum, lower volatility) rather than one, so a single factor's cold streak doesn't set the whole portfolio's direction.
• Roughly 600 small and mid-cap US names, so any one stock's bad week is a rounding error. Pays quarterly.
• The heavyweights of its peer group (VONV, VYM, IUSG) all fish in large caps. FSMD is one of the stronger builds carrying the multifactor idea down the cap ladder.

• VYM Four basis points a year, against a peer-group median near 0.32%. Cheaper than cohort neighbors VONV (0.06%) and FNDX (0.25%).
• Running since 2006 and now a multi-billion-dollar fund that trades actively, so ordinary orders tend to fill at tight spreads.
• Simple mandate: track the FTSE High Dividend Yield Index of US common stocks screened on yield. No manager discretion, no options overlay, plain 1940-Act fund.vanguard.com
• Pays quarterly, and among 100-plus value and multifactor rivals it stands as one of the strongest overall packages in the group.

Worth knowing

• FSMD Small and mid-caps move harder than large caps in both directions. The low-volatility screen aims to soften that ride, not flatten it.
• Fidelity builds the index the fund tracks, so there's no outside benchmark provider setting the rules for what gets in.
• Volume is moderate rather than heavy, so spreads can run wider than the household-name small-cap funds, especially in choppy markets.

• VYM The screen is yield, not payout growth or dividend quality, so a company can qualify simply because its share price fell.
• This is a value slice by design, tilted to established payers, so it behaves differently from a total US market fund.
• Roughly 600 holdings, but weight leans toward the largest payers, so the top of the roster does more of the work than the count suggests.

Full FSMD profile⁠

Full VYM profile⁠