Large/Mid Cap US Value Smart Beta

Value/Growth/Quality/Dividend target 300 long positions weighted by factor attractiveness; Broad Market targets 1,000 long positions, blend of equal and cap weight

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Smart Beta Portfolios (Interactive Advisors Portfolios)

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0.20% annual (IA retains all)

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US-listed equities

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$100

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Item 4 says IA offers 15 Smart Beta Portfolios in total; Item 8 describes ten (5 large plus 5 small-cap versions) plus 5 ESG versions. The portfolios are traded in firm-owned accounts and mirrored to clients.

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Risk score 1-5 (per-portfolio scores not in brochure)

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Not available

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The Value portfolio offers investors disciplined exposure to large and mid-sized U.S. companies whose stock prices may not fully reflect their underlying worth. By applying a systematic, quantitative process, it identifies stocks that appear priced below their fundamental value, targeting an attractive balance of risk and return. This cost-efficient portfolio focuses on companies the market may currently underappreciate, providing a well-researched approach to capturing value across the U.S. equity landscape.

Interactive Advisors is an established name in the field of online investing, with a history of path-breaking work. The platform offers a variety of portfolios, including the Smart Beta portfolios, which are managed by Interactive Advisors's Chief Investment Officer and Investment Management team. The “Smart Beta” approach to portfolio construction is grounded in academic research. The goal of this strategy is to achieve an alternative risk-return profile which is more attractive than a simple capitalization-weighted index such as the S&P 500. Interactive Advisors Smart Beta portfolios follow rules-based investment strategies designed to provide systematic exposure to a fundamental factor or combination of factors.

Capital growth with a similar risk profile to broad equity markets. Investing in equities and prepared to accept fluctuation in portfolio value.

Contrarian-minded investors: Designed for investors who believe that out-of-favor companies can recover and reward patient shareholders. This portfolio directs capital toward stocks that others may have passed over, aiming to capture value as market perceptions shift. Discipline-driven investors: If you prefer a structured, emotion-free approach, you will appreciate the quarterly rebalancing process that consistently refreshes holdings based on objective valuation criteria. Diversification seekers: If you want broad U.S. equity exposure with a clear strategic tilt, this portfolio offers access to hundreds of large and mid-cap value stocks through a single, factor-driven framework.

Research: This portfolio draws on decades of academic research supporting the idea that value stocks, those trading below their estimated fair value, have historically delivered compelling risk-adjusted returns. Interactive Advisors conducted extensive research and back-testing to identify the specific valuation factors and rules that guide portfolio construction. The goal is to deliver a risk-return profile that may be more attractive than a traditional market-cap-weighted index such as the S&P 500. Approach: The portfolio uses a rules-based algorithm to determine which stocks to include and how to weight them. Each quarter, the system rebalances holdings, giving preference to stocks that display strong value characteristics. This structured process ensures that every investment decision follows consistent, objective criteria, keeping the portfolio firmly aligned with its value-driven philosophy. Allocation discipline: The portfolio targets approximately 300 individual stock positions, providing broad diversification across the U.S. equity market. Stocks with attractive valuation ratios, including both trailing and forward price-to-earnings measures, receive larger allocations. This contrarian approach directs capital toward companies that may currently be out of favor but could be positioned for recovery. As an added layer of risk management, the construction process penalizes highly volatile stocks and limits concentration in any single sector. Sell discipline: Sell decisions follow the same objective framework that governs the rest of the portfolio. During each quarterly rebalance, stocks that no longer meet the value criteria are replaced by those with more compelling valuations. This consistent process keeps the portfolio focused on its core objective without relying on subjective judgment. Exceptions: In certain situations, such as mergers, acquisitions, or other corporate actions, the portfolio may sell or adjust positions outside the standard rebalancing cycle. These exceptions help protect investors from disruptions caused by unusual corporate events.

Systematic value discipline: A quantitative process consistently identifies stocks that appear attractively priced using multiple valuation measures, ensuring every decision follows objective criteria rather than market sentiment. Built-in risk controls: The portfolio construction process actively manages volatility and sector exposure, giving you a more balanced approach to pursuing value opportunities. Broad, deliberate diversification: With a target of approximately 300 holdings across large and mid-cap U.S. companies, the portfolio spreads your exposure widely while maintaining a clear focus on compelling valuations.