Baron Launches Active SMID-Cap ETF Focused on 50-60 Stocks

Baron Capital’s SMID-Cap ETF (BCSM) is an active, high-conviction fund that typically holds about 50 to 60 stocks and targets small- and mid-cap companies the manager believes have a path to double in value over a three- to five-year period.

The strategy was presented at a recent TMX VettaFi product due diligence session titled ‘Where Small-Cap Upside Meets Midcap Stability in an Active ETF.’ Randy Gwirtzman, managing director and portfolio manager at Baron Capital, spoke with Roxanna Islam, TMX VettaFi head of sector and industry research, about the fund and its approach.

BCSM combines Baron Capital’s small-cap research platform with a mid-cap opportunity set. The portfolio is constructed with high active share and high conviction, relying on bottom-up company analysis and a multi-pronged risk-management framework to balance sector and position exposures. The fund does not pursue short-term market momentum.

Gwirtzman highlighted interest in enterprise software companies that pair hardware-generated data with analytics. He described holdings such as Samsara as an ‘atoms and electrons’ example, meaning a combination of physical data collection and software layers. The team seeks companies with strong fundamentals and secular or structural tailwinds over a multi-year horizon.

Holdings as of June 30, 2026, included Axon Enterprise (4.24%), Rubrik (Class A) (3.24%), Loar Holdings (3.12%), Coherent (2.84%), Samsara (Class A) (2.81%), Forgent Power Solutions (Class A) (2.70%), EnPro (2.66%), Dynatrace (2.61%), Datadog (Class A) (2.55%) and Mercury Systems (2.52%). Portfolio weights are subject to change as the manager updates research and risk assessments.

The fund’s prospectus and summary prospectuses set out investment objectives, risks, charges and expenses. The documents identify risks specific to smaller-company investing, including lower trading volume that can make securities harder to sell during market downturns and the risk that anticipated developments in special situations do not occur as expected.

The prospectus also explains ETF mechanics: shares trade on the secondary market at market prices rather than net asset value, creation and redemption occur in large block-size Creation Units through authorized participants, and investors generally bear transaction costs such as bid-ask spreads and brokerage commissions. Baron includes forward-looking statements noting management views may change and that current and future portfolio holdings are subject to risk. Investors are advised to read the prospectus before investing.