This is an active value ETF that selects and holds US small- and mid-cap stocks trading below their intrinsic value. It does not mechanically track a specific index. Instead, the management team builds the portfolio through fundamental analysis.

It suits long-term diversified investors who want more active value selection and small- and mid-cap exposure than a passive index provides.

It is an ETF run by Brandes using an active management approach.

The fund selects and holds small- and mid-cap stocks whose market prices are low relative to intrinsic value estimated from data such as company earnings, cash flow, and asset value. Because it is an active structure in which the management team picks stocks directly rather than tracking an index, value judgments drive performance, and low turnover gives it a strong long-term holding orientation.

• Fundamentals-based active value selection
• Small- and mid-cap focus with low turnover

Assets under management (AUM) are $173.1M, and the expense ratio is 0.71% per year.

Its management fee is somewhat higher than those of passive value ETFs such as VBR and VTV, but it stands out for actively selecting stocks rather than simply tracking an index.

Value stocks and small caps tend to be cyclical: they lag relatively during growth-led phases and then show strength when preference for value and small caps comes to the fore. As a result, the trend shows volatility depending on market style preferences.

The small- and mid-cap value category is smaller in assets than large-cap core ETFs, and given the nature of active management, fund flows fluctuate with style preferences and management results. It is an area where interest comes and goes during market style rotations.

Its strengths are active value selection and small- and mid-cap exposure, while its weaknesses are a somewhat higher fee than passive funds and dependence on active management results.

VTV, IWD, IVE, and the others shown in the table are low-fee passive ETFs centered on large-cap value stocks. They share the same value style, but their market cap ranges and management approaches differ. As direct substitutes in the same small- and mid-cap value space, you can consider the passive index fund VBR, along with AVUV and DFAT, which emphasize active or systematic value selection. Differences in fees, management approach, and market cap range are the selection criteria.

Here are the points to review before investing in BSMC. Because it is an active value ETF, it is important to check the fee, management approach, market cap range, and style exposure in advance.

Given the nature of active management, the main risks are divergence from the benchmark and reliance on management results, and the volatility and liquidity risk of small and mid caps can amplify short-term swings. When style preference tilts toward growth stocks, relative underperformance can persist for longer.

It is an option worth considering for long-term investors who want to approach US small- and mid-cap value stocks through active selection. If cost is the priority, a passive value ETF such as VBR is the better fit, and if active value selection matters more, BSMC is the better fit.