Small Cap Broad Market Smart Beta

Smart Beta Portfolios (Interactive Advisors Portfolios)

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0.20% annual

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Small-capitalization US stocks only

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$100

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The brochure just says "small-capitalization company versions of the above five portfolios" and gives no individual names.

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Not available

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The Small Cap Broad Market portfolio gives investors diversified access to smaller U.S. companies through a smart beta strategy that goes beyond conventional index construction. By holding a wide range of small-cap stocks, the portfolio serves as a foundational building block for gaining exposure to a dynamic segment of the equity market. Its systematic design seeks to deliver a more attractive balance of risk and return compared to standard benchmarks like the Russell 2000. This broad-based approach is available at a relatively low cost, making it an accessible option for investors looking to participate in the growth potential of smaller companies.

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 plus with a more complex portfolio or higher risk profile than broad equity markets. Investing in equities and concentrated portfolios and prepared to accept fluctuation in portfolio value.

Small-cap growth seekers: This portfolio suits investors who want exposure to smaller US companies, which historically offer higher growth potential, while benefiting from a structured approach that manages risk through broad diversification. Concentration-conscious investors: If you want small-cap market access but prefer to avoid portfolios that become too heavily weighted in a few high-flying stocks, this blended weighting approach helps keep your exposure spread evenly across the market. Systematic investing advocates: Investors who value a disciplined, rules-based process will appreciate the quantitative framework that drives stock selection and rebalancing, delivering consistent and transparent portfolio management.

Research: The portfolio seeks to achieve a risk-return profile that improves upon traditional capitalization-weighted indexes such as the Russell 2000. Its weighting methodology is grounded in academic research and results in reduced risk concentration among securities that have experienced significant price appreciation. Approach: The portfolio uses a rules-based algorithm to determine how each position is sized, blending capitalization weights with equal weights to create a more even distribution across holdings. It is rebalanced on a quarterly basis to maintain its target allocations and keep the strategy aligned with its design. Allocation discipline: The portfolio targets approximately 1,000 long positions, combining equal-weight and capitalization-weight methods to determine each holding's share. Because of the equal-weight component, it naturally tilts toward smaller companies compared to a purely market-cap-weighted index. This blended approach helps reduce the risk of overconcentration in stocks that have seen dramatic price run-ups. Sell discipline: Sell decisions follow a disciplined, quarterly rebalancing schedule rather than individual stock-level analysis. Each quarter, the portfolio is adjusted back to its target weights, ensuring allocations stay aligned with the strategy's objectives. Exceptions: Positions in stocks undergoing corporate actions may be sold or adjusted outside the regular rebalancing schedule. Performance is calculated using the then-applicable 0.08% management fee until March 1, 2024, and the currently applicable 0.20% management fee as of March 1, 2024.

Built-in diversification across small caps: With roughly 1,000 holdings spanning the US small-cap market, this portfolio spreads your investment across a wide range of smaller companies. That broad reach helps reduce the impact any single stock can have on your overall returns. Reduced concentration risk: By blending equal-weight and capitalization-weight allocations, this portfolio avoids overloading on stocks that have risen sharply in price. Exposure stays balanced rather than being heavily concentrated in a handful of high-performing names. Disciplined, rules-based rebalancing: A systematic, rules-based process drives every allocation decision and quarterly rebalance. This removes emotional bias from the equation and keeps the portfolio on track with its stated objectives.