Bushido Capital US Equity ETF (SMRI)
The Bushido Capital US Equity ETF hunts for cheap stocks. Not “stocks that went down” cheap, but genuinely undervalued companies where the market has mispriced the business. The fund looks for mid-sized American firms that print cash, trade below what they are worth, and are run by managers who actually care about shareholder returns. It is built on an old idea: buy good businesses at prices that make sense, then let them compound.
How the fund picks stocks
Bushido starts with the obvious: the stock has to be cheap relative to what the business is actually worth. This is not a momentum fund or a growth fund. The managers look at the company’s earnings, its cash flow, its assets, and compare that against the stock price. If the numbers say the market is undervaluing it, it goes on the candidate list.
Then they dig deeper. They want to see a business that generates real free cash flow — money left over after paying for day-to-day operations and keeping equipment and facilities running. This matters because it proves the business is not just growing on paper; it actually makes money. Debt matters too. They prefer companies with reasonable debt loads, not businesses buried in leverage that will crumble if something goes wrong.
Last, they look at who runs the place. Do the executives own stock? Do they issue dividends instead of pretending they are a growth company forever? Are they disciplined about acquisitions? The best stock price in the world does not matter if the management team is reckless or the company is run for the executives’ benefit instead of the shareholders'.
What you actually own
The fund holds 30 to 50 stocks, all mid-cap — companies bigger than micro-caps but smaller than the mega-cap darlings everyone knows. This is where the fund makes its money: the mega-cap blue chips get all the attention and typically trade fairly valued or expensive. Mid-cap names get less coverage, so opportunities hide easier.
The portfolio looks like a normal slice of the U.S. economy. You get some industrials, some financials, some utilities, some healthcare. The diversity matters because it means if one sector has a bad year, you still own other things. Bushido is not trying to be clever; it is just trying to find good businesses at reasonable prices.
What it costs and how it trades
As an actively managed ETF, SMRI charges a fee for Bushido’s research and decision-making. That fee has to be earned; if SMRI underperforms a cheap index of mid-cap stocks by more than its fee, the active management is not delivering value. The fund trades on the NASDAQ, so you can buy or sell it anytime the market is open.
The real risks
Value investing works when the market eventually recognizes that cheap is actually cheap. But the market can stay irrational longer than you can stay invested. A stock can be undervalued and stay undervalued for years if no one cares about it. That is the biggest risk: you pick something cheap and it gets cheaper before it gets expensive.
Concentration risk is a second worry. With 30 to 50 holdings, a few large positions can move the whole fund. If the biggest holding hits trouble, the fund stumbles.
There is no leverage here, so no volatility decay. But because it is an actively managed ETF, performance depends entirely on whether Bushido’s stock picks beat the market by enough to cover the fee. Some years they will. Some years they will not.
Who should own it
This fund is for investors who believe in value investing and want someone else to do the hard work of finding the cheap stocks. If you already believe mid-cap value is where the money is, SMRI lets you hire Bushido to do the research instead of doing it yourself.
It is not a core holding. It is a thematic bet — a satellite position — for investors tilted toward value. If you want a simple, all-purpose stock portfolio, a cheap broad-market index fund is probably better.
How to research SMRI
Get the prospectus and read what Bushido says about how it picks stocks. Look at the current holdings and see if they actually fit the description — cheap, strong cash flow, sensible management. Compare SMRI’s returns to a mid-cap value index fund to see if the active management is paying for itself. Read Bushido’s quarterly commentary if they publish it; sometimes managers explain their thinking and that helps you understand if their approach makes sense to you.