This is an active ETF that selectively holds U.S. small and mid-cap stocks with growth potential, drawn from the market capitalization ranges of the Russell 2000 and Russell Midcap indexes.

It suits investors who seek small and mid-cap excess returns through active stock selection rather than full index replication.

It is an ETF run by Neuberger Berman using an active management approach.

Using the market capitalization ranges of the Russell 2000 and Russell Midcap indexes as a guide, the management team actively selects small and mid-cap stocks with growth potential. The core of the strategy is building a portfolio based on bottom-up stock analysis rather than index replication.

• Active stock selection rather than passive index tracking
• A portfolio with a relatively high weighting in industrials and technology

Assets under management (AUM) stand at $117.3M, and the total expense ratio is 0.65% per year.

Fee levels and sector allocation methods differ from those of comparable small and mid-cap active ETFs, so a comparison is worthwhile.

Given the nature of small and mid-cap growth stocks, volatility is higher than for large caps, and returns tend to swing with interest rates, the economic cycle and trends in the industrials sector. Because the fund is actively managed, performance relative to the index may also vary across market phases.

It is an active ETF that was launched relatively recently and still has a comparatively small asset base, and its fund flows appear to fluctuate with changes in the small and mid-cap market environment.

Its strength is the pursuit of excess returns in small and mid-cap growth stocks through active management, while its weaknesses are a higher fee than passive funds and dependence on the management team.

BLCR, EAGL, LCAP, AVLC and OAKM, shown together in the table, are actively managed or large-cap core equity ETFs. They differ from NBSM in market capitalization range and management style, which makes them useful reference points for direct comparison. IWM, which passively tracks the Russell 2000 itself, and IWR, which passively tracks the Russell Midcap, are low-fee alternatives covering market capitalization ranges similar to NBSM. IWO, which focuses more on growth stocks, is also worth considering.

Here are the points to review before investing in NBSM. Given the nature of an active small and mid-cap ETF, you should check costs, volatility, track record and the degree of sector concentration in advance.

The high volatility typical of small and mid-cap stocks and the short track record are the main risk factors. In an economic slowdown, corrections can be deeper than for large caps, and investors should also watch the volatility that comes from concentration in the industrials sector.

It is a suitable option for investors who aim for small and mid-cap growth excess returns through active stock selection rather than index replication. If you want low-fee passive exposure, alternatives such as IWM and IWR are also worth considering.