This is an actively managed ETF in which the management team hand-picks U.S. small and mid-cap stocks rather than mechanically tracking an index. It selects companies whose market prices it judges to be low relative to their fundamentals and holds them in a relatively concentrated portfolio.

It suits investors who want more than passive index tracking and expect active stock selection to add value in small and mid-cap stocks.

The ETF is managed by Hilton Capital Management using an active management approach.

Using its own analytical process, the management team selects U.S. small and mid-cap companies whose current prices it believes do not fully reflect their fundamental earnings power. The portfolio spans value, growth, and core styles and is built with a relatively concentrated number of holdings.

• An active selection strategy focused on U.S. small and mid-cap stocks
• A relatively concentrated portfolio with a preference for low turnover

Assets under management (AUM) stand at $148.1M, and the Expense Ratio is 0.55% per year.

Unlike passive index-tracking ETFs, performance depends on the management team's stock-picking ability, so it is worth reviewing both the fee level and the investment philosophy.

Small and mid-cap stocks tend to be more sensitive to the economic cycle and more volatile than large caps, and their relative strength has alternated depending on the interest rate and business cycle phase. Because the fund is actively managed, performance depends on the results of its stock selection.

The small and mid-cap category tends to see fund flows react more sharply to changes in market conditions than large caps do, and interest typically rises relatively when risk appetite strengthens.

Active small and mid-cap selection is its strength, but performance dispersion and the fee burden that come with active management are factors to consider.

BLCR, EAGL, AVLC, and OAKM shown in the table are large-cap-focused active and core ETFs. They differ in issuer and fee level, and their market cap category is somewhat different from that of SMCO. RSMC is a comparable product in the same small and mid-cap segment. Other alternatives in the same segment that can also be compared include AVUV, which focuses on small-cap value stocks, VBR, a passive small-cap value fund, IJR, a small-cap core fund, and CALF, a small-cap fund based on free cash flow. The value added by active management versus passive, along with the difference in fees, is the key selection criterion.

Here are the points to review before investing in SMCO. Because it is an active small and mid-cap ETF, it is advisable to check its investment philosophy, costs, and volatility in advance. We recommend understanding how it differs from a passive index ETF before approaching it.

The high volatility typical of small and mid-cap stocks and the performance dispersion of active management are the main risk factors. If the management team's selection judgments diverge from the market, the fund may underperform its benchmark, and a relatively concentrated portfolio can increase individual stock risk.

If you want more than a passive index and expect active selection to add value in small and mid-cap stocks, this ETF is worth considering. If you place more weight on cost or want to reduce volatility, we recommend comparing it with passive small-cap alternatives before choosing.