Argent Capital Management, a St Louis, Missouri-based boutique investment manager specializing in US equities, has debuted its first ETF with the introduction of an actively managed mid-cap strategy.

Kirk McDonald, Portfolio Manager and Senior Research Analyst, Quantitative Investments at Argent Capital Management.

The Argent Mid Cap ETF (AMID US) has been listed on Nasdaq with an expense ratio of 0.52%.

The fund is managed by Kirk McDonald, Portfolio Manager and Senior Research Analyst, Quantitative Investments at Argent Capital Management.

McDonald brings 20 years of financial industry experience including a decade at Argent Capital Management where he developed and began managing the firm’s mid-cap strategy in 2014.

McDonald notes that mid-cap stocks offer investors a ‘sweet spot’ by historically providing enhanced growth potential compared to their larger-cap counterparts but with more price stability than small-caps.

In managing the fund, McDonald harnesses a blend of quantitative and fundamental research to identify good businesses that are undergoing internal or external positive change. The strategy uses Argent’s proprietary quantitative tool, The Argent Alpha Model, to develop a concentrated and selective portfolio of 35-50 mid-cap stocks.

Kirk McDonald said: “Our disciplined investment process focuses on owning the right businesses with a seasoned management team, strong balance sheet, above average cash flow, access to capital, and a long runway for growth. We buy them when we believe they are exhibiting positive change such as new management teams, new products, or a change in the industry cycle. We view the firms we invest in as our partners – they are businesses to us, not simply stocks, and our goal is to own them forever.”

Argent’s mid-cap strategy has notably outperformed its benchmark since inception, delivering an annualized return of 9.54% compared to 8.25% for the Russell MidCap Index. The strategy has slightly underperformed over the past year, however, slumping by 17.44% versus 17.30% for the benchmark. All data as of the end of June 2022.

The largest passive ETFs targeting US mid-cap equities are offered by BlackRock and Vanguard – the $65 billion iShares Core S&P Mid-Cap ETF (IJH US) and $51bn Vanguard Mid-Cap ETF (VO US) come with expense ratios of just 0.04% and 0.05%, respectively.