VIDEO: ETF of the Week: FENI

Chuck Jaffe: One fund on point for today. The expert to talk about it. Welcome to the ETF of the Week!

Yes, this is the ETF of the Week. Where we examine trending, new, newsworthy, unique, and intriguing ETFs with Todd Rosenbluth, head of research at VettaFi. And if you go to VettaFi.com, you’ll find all the tools you need to improve yourself as an ETF investor.

Todd Rosenbluth, great to chat with you again.

Todd Rosenbluth: It’s great to be back.

Jaffe: Your ETF of the week is.

Rosenbluth: The Fidelity Enhanced International ETF (FENI)

Jaffe: FENI, Fidelity Enhanced International. International has been doing great, but what are the enhancements here that make you particularly interested in this fund right now?

Rosenbluth: You’re right, Chuck. Fidelity’s fund is actually outperforming the traditional index-based products, the EAFE-based strategies that are out there, in 2025. It’s a couple hundred basis points stronger. That caught our eye. How is it doing so? This is a relatively low cost active ETF that the enhancement is more of a quantitative strategic approach to investing, so it’s got a broad approach to the overall strategy.

It’s going to benefit from the selection of individual stocks. And it’s working quite well. And what we’ve seen is that investors have been gravitating towards this. Investors have largely sat out the international equity rally for much of 2025. But we’ve seen in the past month this ETF from Fidelity, or FENI, has really seen strong interest.

Jaffe: Fidelity, on its ETF side of things, has been one of those companies that’s been moving its active traditional fund strategies over to ETFs. So is that what they have done with this? Or is this a fund – because it’s got an established track record, it’s been around for a while – that has been standing on its own two feet without a classic fund tied to.

Rosenbluth: So this is one of those funds that I believe launched as an ETF. But you’re right. They have been moving some mutual funds to ETFs and they’ve been building out their lineup. They’re, right now, the sixth largest of the active ETF providers. They have a goal to be a top three provider. And it’s funds like this Fidelity International ETF that I think is going to help them get there.

Advisors and investors are increasingly turning to active ETFs. Active ETF so roughly 40% of the net inflows in 2025, despite being roughly 10% of the overall asset base. And you get low cost benefits of diversification, but security selection. And you’re getting companies that you wouldn’t have within your U.S. equity exposure. So Sony, for example, the Japanese company, is one of the top ten holdings that you’d find within this Fidelity ETF – obviously not based within the S&P 500.

Jaffe: I want to go back on something that you said because you said you’re getting low cost exposure. So FENI, since we’ll call it buy what you want to call it by, FENI – the Fidelity Enhanced International ETF – has an expense ratio of 0.29%. An index fund is going to be less than half of that if you’re buying the leading index funds that are tracking the EAFE.

But, as you pointed out, the performance is better in this fund. And oh, by the way, when we’re talking performance, it’s net of expenses. So if you look at two funds you go, well this one’s more expensive, but it’s had better performance. It has more than overcome the hurdle. So, not worried at all? Or, 0.29% is cheap enough that it would be very different if we were talking double that level or something like that?

Rosenbluth: So you’re right. And I just want to use my words. What we find for low cost index based products is you can get 10 basis points or so, 10–15 basis points to get broad index based exposure to international equities. International equity investing on the active side tends to be more expensive because to do that fundamental analysis and look through companies from the United States, you might need to have on the ground resources and do some meetings in person.

So 29 basis points kind of splits the middle. Fidelity aimed to do that to use their scale as an advantage for this enhanced suite. So I think 29 basis points is a reasonable fee to be paying for active management in a more strategic manner. And yes, you’re right, the fees are included in that performance. You said Feeney; I’m saying Fenney. I guess we can split the difference there too.

Jaffe: Might just be tomato and tomato when we look at that stuff. But what’s not tomato and tomato is this is the ETF of the week. And although you don’t make market calls, I find it a particularly interesting time to do this because I had a guest on Money Life this week who was talking about how international has clearly been the leading place this year, but he doesn’t expect it’s going to be the leading place for the rest of this year.

Now you’re not making a market call. That’s not what we’re trying to do. But when you’re talking about, hey, look at a fund like this now, how much do you have to warn people that, you know, this has been quite a party, but it’s been going on for a little while?

Rosenbluth: I’m intrigued by your guest, who… was wrong for the first five months of the year, thinking that the U.S. equity market is going to outperform international investing. I’m not necessarily saying that is or is not going to be the case, but I think it’s hard to see the strength that we’re seeing investing in Europe and Asia and the developed markets in particular, and ignore it.

And so if you are underexposed to international equities strategies coming into the year, you’re even more underexposed to it because international equities, you’re missing out on it. So we think investors should take a closer look at international equity ETFs. We’ve talked about a handful of them in the last few months. Some that are actively managed, some that are indexed, some that do much more fundamental security selection than what we’re seeing here with the Fidelity product.

There’s lots of good choices for you to consider, but you probably have less exposure to the international equity markets than you might realize. And you’re being penalized for it. If it continues, you want to have exposure.

Jaffe: I will point out, in defense of that strategist, he was not wrong thus far this year. He entered this year saying international would beat domestic and to be fully diversified. It’s what he sees for the next six months that’s going to be interesting. That’s where we have to see whether or not the rubber hits the road on this one.

Rosenbluth: So disclosure, fully appreciate that for investors who want to obviously, you should be looking forward with an investment strategy, not backward. If you think that the international equity markets are going to do as well, if not better than the U.S., in the next six plus months of the year. FENI is a great strategy to get exposure.

Active management in a low cost manner can fit in very nicely with a traditional index based product and give you a little bit of active tilt. Or, if you have an active manager, to reduce some of that benchmark risk.

Jaffe: How well does this fund play with others and mix with others? For somebody who has, we’ve been saying you don’t have enough international exposure. It’s a message we’ve said a bunch of times this year. But if somebody has gone out, whether they had it before or they bought some of the funds we’ve talked about previously, do they add this to a portfolio? Does it bring enough uniqueness, or is this like this is your core international holding? If you don’t have enough, this is one of 1 or 2 that you want to have there>

Rosenbluth: So I think the same way in the US, you probably have a couple of different strategies to balance that out in terms of at the cap level and the style level and diversification. I think internationally it’s prudent to have probably a pair of international equity strategies. So how this could play well, if you had a low cost index based product, you’re getting some active management. You’re also getting some differentiation.

I can’t look side by side at the individual holdings and look at the camera at the same time. But, if I did, I’d be able to see there are differences in the top ten holdings of the Fidelity fund and IEFA, which is an iShares Low Cost index-based product. So this could pair well with IEFA.

I think we might have talked about a more concentrated international equity ETF before – and this could also [pair with that]. You get active management, but you’re getting that risk spread around through more securities. The largest position is roughly 2% of the portfolio, as I look off screen briefly. So this can play well with other ETFs.

Jaffe: Fenny, or Feeney, anyway you pronounce the ticker symbol, it’s Fidelity Enhanced International. The ETF for the week from Todd Rosenbluth. Todd, look forward to chatting with you again next week.

The ETF of the week is a joint production of VettaFi and Money Life with Chuck Jaffe. And yeah, I’m Chuck Jaffe. And if you like my show, if you want to check out that comment from that other manager, go find it on MoneyLifeShow.com, or by looking for it wherever you find your favorite podcasts. 

If you’re searching for more information on your favorite mutual funds or what might be your next great ETF, go to VettaFi.com where they have all the tools you need to make yourself a savvier, smarter investor. hey’re on X at @Vetta_Fi, and Todd Rosenbluth, my guest, their head of research, he’s on X as well at @ToddRosenbluth. 

The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following along on your favorite podcast app. And until next week, when we’ve got another great ETF for you, happy investing everybody!

For more news, information, and analysis, visit VettaFi | ETFDB.