Small Cap Growth Smart Beta US Stocks

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 Growth portfolio provides investors with targeted access to smaller U.S. companies selected for their above-average earnings growth characteristics. Built on a smart beta framework, this portfolio selects and weights holdings based on fundamental growth characteristics rather than simply tracking a traditional market-cap-weighted index. The result is a well-diversified collection of stocks spanning a segment of the market known for its dynamic opportunity set. A disciplined, evidence-driven process keeps the portfolio focused on capturing these opportunities at a relatively low cost.

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.

Growth-focused investors: This portfolio is designed for investors who seek meaningful exposure to companies expected to deliver strong earnings growth, particularly within the small cap segment of the U.S. equity market. Small cap enthusiasts: If you are drawn to the higher growth potential that smaller companies can offer and are comfortable with the added volatility that comes with them, this portfolio provides structured, diversified access to that opportunity. Discipline-driven investors: Investors who prefer a systematic approach over subjective stock picking will appreciate how this portfolio uses quantitative frameworks to make consistent, research-backed decisions each quarter.

Research: The portfolio construction process draws on academic research into factor-based investing, which identifies specific company traits linked to stronger potential outcomes. Interactive Advisors has conducted extensive research and back-testing to determine which growth factors and selection rules best capture the characteristics of promising small-cap companies. This evidence-based foundation seeks to deliver a risk-return profile that is more compelling than a traditional capitalization-weighted benchmark such as the Russell 2000. Approach: The portfolio uses a systematic, rules-based process to determine how each position is weighted. It is rebalanced every quarter, at which point the algorithm reassesses all eligible companies and favors those displaying promising growth traits. This disciplined method removes emotional bias from investment decisions and helps ensure the portfolio stays aligned with its core growth objective. Allocation discipline: The portfolio targets roughly 300 individual stock positions, providing broad diversification across the small-cap landscape. Stocks with more attractive growth metrics receive larger allocations, and the process evaluates both historical and projected earnings growth to gauge each company's potential. As an added layer of risk management, the construction process reduces exposure to highly volatile stocks and limits concentration in any single market sector. Sell discipline: Sell decisions occur during the quarterly rebalance, when the portfolio replaces holdings that no longer rank favorably on growth measures with those that do. This structured approach ensures the portfolio continuously refreshes its exposure toward companies exhibiting the most appealing growth profiles. Exceptions: Positions in stocks undergoing corporate actions may be sold or adjusted outside the regular rebalance schedule. Performance calculations reflect the applicable management fee rate at the time: 0.08% until March 1, 2024, and 0.20% from March 1, 2024 onward.

Systematic growth selection: A structured screening process zeroes in on companies with the strongest earnings momentum, ensuring every holding earns its place through measurable financial merit rather than subjective judgment. Built-in risk management: The construction process incorporates safeguards that temper exposure to the most unpredictable names and guard against overreliance on any single industry, helping smooth the ride in a naturally volatile corner of the market. Broad small cap exposure: With roughly 300 holdings, your investment is spread across a wide cross-section of emerging growth companies, so no single position can disproportionately influence your overall results.