While many investors seem fixated on the mega cap equities, one would be remiss to ignore the immense potential of SMIDcaps.
There are more than a few reasons why SMIDcaps currently offer an attractive investment option. For one, valuations between small and mid cap equities remain significantly lower than large caps at the time.
These stark discounts come with the added benefit of the Federal Reserve’s ongoing rate-cutting cycle. Lower interest rates offer incredible growth opportunities for all companies, but small caps have historical precedent for doing exceptionally well in these moments.
That being said, it can be tricky for investors to navigate the SMID space, especially amid small caps. While small caps can offer great long-term results, passive indexing strategies may struggle to hone in on the companies with the most potential.
NBSM's Active Strategy Can Work
However, situations like these are exactly where actively managed strategies can truly shine. For example, take a closer look at the Neuberger Berman Small-Mid Cap ETF (NBSM ).
NBSM is one of the actively managed funds offered by Neuberger Berman. The fund looks to provide long-term growth through a high-quality portfolio of SMIDcap equities.
To properly navigate the sea of small and mid cap equities, NBSM’s active portfolio team seeks companies with resounding quality. This is determined through a number of factors, including differentiated business models, stable cash flow, responsible balance sheets, and good profitability. With an active portfolio management team and a focus on high quality, NBSM can better find the companies best positioned for long-term success.
An active portfolio team can also help a portfolio mitigate potential volatility. Oftentimes, active ETFs can adapt to changing market, sector, and economic conditions much more efficiently than a passive indexing strategy. This added security is certainly even more valuable in a SMIDcap strategy.
Ever since NBSM launched backed in March 2024, the fund has offered competitive long-term results. As of November 25th, 2024, NBSM’s NAV has jumped over 11% since the fund’s inception.
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