VIDEO: ETF of the Week: FENI

In a recent "ETF of the Week" podcast, VettaFi's Todd Rosenbluth highlighted the Fidelity Enhanced International ETF (FENI), noting its outperformance relative to traditional EAFE-based index funds in 2025 by approximately 200 basis points. FENI is a low-cost active ETF employing a quantitative strategic approach, and has seen increased investor interest recently; while it has a higher expense ratio (0.29%) than passive international equity ETFs, Rosenbluth suggests that the active management and stock selection justify the cost, particularly for investors seeking international exposure or diversification alongside existing holdings.

Analysis

The Fidelity Enhanced International ETF (FENI) has demonstrated notable strength, outperforming traditional EAFE-based index products by approximately 200 basis points in 2025, according to VettaFi's Head of Research, Todd Rosenbluth. This performance is attributed to its active management style, which employs a quantitative strategic approach to stock selection, allowing for diversification benefits such as holding non-US stocks like Sony, a top ten holding not found in the S&P 500. FENI has recently attracted significant investor interest, aligning with a broader trend where active ETFs accounted for roughly 40% of net inflows in 2025 despite representing only about 10% of the total ETF asset base. While FENI's expense ratio of 0.29% is higher than passive international equity ETFs (typically 0.10-0.15%), Rosenbluth considers it a 'reasonable fee' for active management in the international space, especially as published performance figures are net of these expenses. The fund's strategy of broad diversification, with its largest holding at approximately 2% of the portfolio, allows it to potentially pair well with other international strategies, including low-cost index funds like IEFA, offering a differentiated exposure. This discussion occurs amidst a backdrop of strong performance in international equities, particularly in developed European and Asian markets, prompting considerations for investors potentially underexposed to these regions. Fidelity, currently the sixth-largest active ETF provider, aims to leverage funds like FENI to achieve its goal of becoming a top-three provider.

Key Decisions for Investors

• Investors seeking actively managed international equity exposure should evaluate FENI, given its reported outperformance of approximately 200 basis points against EAFE-based strategies in 2025, driven by its quantitative stock selection approach.
• The 0.29% expense ratio, while higher than passive alternatives, should be assessed against the fund's net-of-fee performance and the potential alpha from active management in international markets, which has thus far justified the cost.
• For portfolios potentially underexposed to international equities, FENI could serve as a core holding or a diversifying complement to passive international funds, offering differentiated holdings and a way to participate in current international market strength.