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Finding High-Conviction Growth in Baron SMID cap ETF, BCSM

July 9, 2026 11:22 AM GMT · ETF Trends

As megacap valuations remain stretched, more investors are looking to small- and mid- cap companies for growth exposure. At a recent TMX VettaFi product due diligence session, “Where Small-Cap Upside Meets Midcap Stability in an Active ETF,” Randy Gwirtzman, managing director and portfolio manager at Baron Capital, joined Roxanna Islam, TMX VettaFi head of sector & industry research, to discuss this opportunity in an active ETF: Baron SMID-Cap ETF (BCSM).

SMID-Cap Advantage: Small Meets Mid in BCSM

BCSM leverages Baron Capital’s four decades of research expertise and extends its existing small-cap research platform to a larger opportunity set. Gwirtzman highlighted that the small- to mid-cap universe, in particular, offers a powerful performance edge over its larger peers.

See More: Tailormade Tech With Baron Capital’s BCTK

BCSM is a high-conviction, high-active-share portfolio typically made up of 50 to 60 holdings. The ETF targets companies with strong fundamentals and a clear path to potentially doubling their value over a three- to five-year horizon. Rather than chasing near-term market momentum, the fund seeks growth opportunities supported by secular and structural tailwinds, while using a multi-pronged risk-management framework to balance exposures.

Finding Durable Software Winners Amid AI Disruption

While momentum-driven sectors have rewarded AI semiconductor infrastructure companies, BCSM remains focused on long-term opportunities, including enterprise software companies with physical-world data advantages. These attributes help to insulate the fund from the effects of AI disruption, known lately as the “SaaSpocalypse.”

Gwirtzman pointed to holdings like Samsara as an “atoms and electrons” play, merging physical hardware data with analytical software layers that cannot be easily replicated. The fund’s bottom-up research process seeks to identify these types of companies that exhibit durable long-term growth potential.

By capturing high-quality compounders through rigorous research, BCSM offers a highly active, balanced alternative to passive market-cap benchmarks, which emphasize a company’s current size rather than its future growth prospects.

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Important Information

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectuses contain this and other information about the ETFs. You may obtain them from the Funds’ distributor, Baron Capital, Inc., by calling 1-800-99-BARON or visiting BaronCapitalGroup.com. Please read them carefully before investing.

Risks: Specific risks associated with investing in smaller companies include that the securities may be thinly traded and more difficult to sell during market downturns. The risk of investing in special situations is that the anticipated development does not occur or its impact is not what the Adviser expected.

Investors generally incur the cost of the spread between the prices at which shares are bought and sold. Buying and selling shares may result in brokerage commissions which will reduce returns.

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Investors buy and sell shares of ETFs at market price (not NAV) in the secondary market throughout the trading day. These shares are not individually available for purchase or redemption directly from the ETF. Baron Capital, Inc. serves as the distributor of the Creation Units for the ETFs on an agency basis. Baron Capital does not maintain a secondary market in Fund’s shares.

The discussion of market trends is not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this document reflect those of the respective writer. Some of our comments are based on management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. Our views reflect our best judgment at the time and are subject to change at any time based on market and other conditions and Baron Capital has no obligation to update them.

Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

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Baron Capital Management, Inc. (“BCM”) and BAMCO, Inc. (“BAMCO”), are registered investment advisers with the U.S. Securities and Exchange Commission (SEC) and wholly owned by Baron Capital Group, Inc.