This is an actively managed product run directly by Bahl & Gaynor, a well-known name in dividend growth investing. Through its own fundamental analysis, it identifies small- and mid-cap stocks with competitive advantages. Rather than focusing on companies with merely high dividend yields, it concentrates on companies that can raise their dividends consistently on the back of earnings growth.

It suits investors who want to move beyond large-cap-focused dividend investing and enjoy both the high growth potential unique to small and mid caps and dividend growth.

Bahl & Gaynor launched it in 2021 as an ETF with an active (actively managed) approach.

The portfolio is built by carefully selecting high-quality companies within its market capitalization range that are expected to grow their dividends. It uses a bottom-up approach that focuses on each company's individual competitiveness and cash flow growth rather than the macroeconomic environment, and it shows a long-term investment orientation with infrequent turnover of holdings.

• Active dividend growth management specialized in small and mid caps
• Stock selection centered on the correlation between earnings growth and dividend increases

Assets under management (AUM) stand at $1.5B, and the expense ratio is 0.60% per year.

Unlike large-cap-focused dividend growth ETFs such as DGRO and TDVG shown in the table, SMIG concentrates on the small- and mid-cap segment to look for differentiated return opportunities. It shares the same investment philosophy as BGIG, but the two differ in their target market capitalization range.

The fund is affected by overall multiple changes in the small- and mid-cap market and by the interest rate environment. Thanks to its dividend growth characteristics, it can also show relatively good defensiveness compared with general small- and mid-cap indexes during volatile market conditions.

When the perception that interest rates have peaked spreads, or when rotation into value and small- and mid-cap stocks appears, inflows from investors seeking stable income and growth at the same time have been observed.

This product seeks balanced risk-adjusted returns by combining a stable ability to raise dividends with the growth momentum of small and mid caps.

If you want to expand into large-cap dividend growth stocks, VIG, SCHD, and DGRO can be good alternatives. Meanwhile, if you prefer a passive strategy that tracks an index within the small- and mid-cap range, you can review products such as SMDV and SDY together and compare differences in expense ratios and management style.

These are the key points to review before deciding to invest in SMIG. You should check whether the characteristics of the small- and mid-cap market and the active dividend growth strategy fit your own investment profile.

In the event of sharp fund outflows from the small- and mid-cap market or a credit crisis in a particular sector, the fund may see larger corrections than large caps, and there is a risk that its valuation will decline if dividend growth falls short of expectations.

It is a strategic asset suited to investors who want a balance of long-term income growth and capital gains rather than a stable monthly dividend. It can play an excellent role as a complement to a portfolio centered on large caps.