Small Cap Value

IA Smart Beta

The Small Cap Value portfolio gives investors systematic exposure to smaller U.S. companies that appear undervalued relative to their fundamentals. Using a quantitative screening process, the portfolio identifies stocks trading below what their financial metrics suggest they may be worth, focusing on businesses the broader market may be overlooking. With approximately 300 holdings, it provides broad diversification across the small-cap segment of the U.S. equity market. This disciplined, factor-driven approach aims to capture the potential benefits of value investing in smaller companies while keeping costs relatively low.

Portfolio insights

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Built-in value discipline: This portfolio uses a systematic, rules-based process to identify small-cap stocks trading below their estimated fair value. By relying on quantitative frameworks rather than subjective judgment, it removes emotional bias from stock selection and consistently targets companies that may be underpriced by the broader market.
Smarter risk controls: The portfolio is designed to limit exposure to highly volatile stocks and avoid heavy concentration in any single sector. With a target of approximately 300 positions, your investment is spread across a wide range of companies, helping to reduce the impact of any one holding on your overall returns.
Research-backed factor exposure: The goal is to achieve an alternative risk-return profile, which is more attractive than a simple capitalization-weighted index such as the Russell 2000. By weighting stocks based on valuation ratios rather than company size alone, this approach gives you targeted exposure to the value factor that academic research has linked to long-term return potential.

Investment suitability

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Contrarian-minded investors: If you believe that overlooked companies can offer compelling opportunities, this portfolio aligns with your thinking. Its quantitative process systematically directs capital toward small-cap stocks with attractive valuations, seeking to capture potential recoveries before the broader market catches on.
Diversification seekers: Investors looking to complement a core large-cap or growth-oriented portfolio may find small-cap value exposure a useful addition. This portfolio targets a distinct corner of the U.S. equity market that often behaves differently from widely held large-cap indexes, helping to broaden your overall market exposure.
Risk-aware growth pursuers: Small-cap stocks can offer higher growth potential, but they also carry greater volatility. This portfolio is suited for investors who want access to that upside while appreciating built-in safeguards, such as volatility constraints and sector diversification limits, that aim to manage the bumpier ride smaller companies can bring.

Methodology

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Research: This portfolio's construction is grounded in academic research on factor-based investing. The goal is to achieve an alternative risk-return profile, which is more attractive than a simple capitalization-weighted index such as the Russell 2000. Interactive Advisors has conducted extensive research and back-testing to identify the specific valuation factors and rules that guide how stocks are selected and weighted.
Approach: The portfolio uses a systematic algorithm to determine which stocks to include and how much to allocate to each position. Every quarter, the portfolio is rebalanced so that companies displaying strong value characteristics, meaning their stock prices look attractive relative to their earnings and other financial measures, have a greater likelihood of being included.
Allocation discipline: The portfolio targets roughly 300 individual stock positions, providing broad exposure across the small-cap value landscape. Stocks with more attractive valuation ratios, including both trailing and forward price-to-earnings measures, receive larger allocations. This contrarian discipline directs capital toward companies that may currently be out of favor but could be positioned for recovery. As a risk control measure, the construction process reduces allocations to stocks with excessive volatility or poor liquidity.
Sell discipline: Sell decisions follow the same disciplined framework that guides the rest of the portfolio. During each quarterly rebalance, stocks that no longer meet the value criteria are replaced by companies with more compelling characteristics.
Exceptions: Positions in stocks undergoing corporate actions, such as mergers or acquisitions, may be sold or adjusted outside the normal rebalance schedule. Performance is calculated using then-applicable 0.08% management fee until March 1, 2024, and currently applicable 0.20% management fee as of March 1, 2024.

Strategy

Smart Beta

Inception

Dec 22, 2016

Annualized return (inception)

7.60%

Portfolio risk score

Learn more

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.

Management fee

0.20%

Minimum investment

$100

Investment (below min)

Annual costs

Performance Chart

Metrics

Last 30 days	-7.2%
Last 90 days	-2.6%
Last 365 days	15.5%
Last 5 years	33.3%
Since inception (Dec 22, 2016)	97.2%
Since inception (annualized)	7.6%
2026 (YTD)	0.2%
2025	7.2%
2024	5.5%
2023	23.5%
2022	-12.7%
2021	35.5%
2020	0.7%
2019	25.9%
2018	-11.1%
2017	6.3%

Volatility	21.8%
Sharpe ratio	0.48
Sortino ratio	0.74
Maximum drawdown Shows the largest percentage drop in portfolio value from a peak to a subsequent low point over a specific time period, representing your worst-case scenario loss had you invested at the worst possible time and held through the decline. However, this metric is incomplete because it only shows the single worst loss without revealing how often other drawdowns occurred, their frequency, how long losses took to recover, or whether the portfolio ever fully recovered at all.	-14.4%
Value-at-risk (95%, 1 week)	-5.0%

Manager

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.

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Disclosures

Past performance is no guarantee of future results, and all investments, including those in this portfolio, involve the risk of loss, including loss of principal and a reduction in earnings.

This portfolio was launched on Interactive Advisors on December 22, 2016. On that date, Interactive Advisors started trading its own funds in a brokerage account trading this strategy. This portfolio was opened to client investments on December 22, 2016. All performance information on this page is actual performance of the Interactive Advisors proprietary account and presented “net of fees”. The actual performance chart is provided for informational purposes only, and should not be used as the basis for making an investment decision. Actual client returns will differ.

The ESG variants of the Smart Beta and Asset Allocation Portfolios and the Socially Responsible Investing portfolios use an Environmental, Social and Governance (“ESG”) investment strategy. Such a strategy could limit the types and number of investment opportunities available to this portfolio, lead the portfolio to underperform a portfolio without an ESG focus or with a distinct ESG focus, and result in the portfolio investing in securities or industry sectors that underperform the market as a whole or foregoing opportunities to invest in securities that might otherwise be advantageous to invest in. Interactive Advisors could also be unsuccessful in creating a portfolio investing in stocks of companies or ETFs made up of companies that exhibit positive or favorable ESG characteristics and the ETF manager (or the provider of the index the ETF seeks to track) may not succeed in selecting issuers that exhibit positive or favorable ESG characteristics in constructing the ETFs.

Additional information on the risks, conflicts of interest, applicable brokerage commissions, fractional shares, and limitations on investments and divestments associated with this portfolio can be found here and on the Forms and Agreements page.

Important information

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The actual performance of the manager account displayed on this page is based on the performance of an Interactive Advisors proprietary account invested using this strategy and is calculated by Interactive Advisors on a daily time-weighted basis, including cash, dividends and earnings distributions. The actual performance for this portfolio is presented “net of fees” and reflects the deduction of the Interactive Advisors advisory fee, Interactive Brokers LLC brokerage and other commissions (when commissions were charged) and expenses that a client has to pay if he invests in this portfolio after the launch date, but not any fees clients must separately pay the issuers of any ETFs.
We rely on mathematical formulas, computer programs, and pricing information from third-party vendors (e.g., Refinitiv Worldscope database) to provide these returns. Neither Interactive Advisors nor any of its data or content providers shall be liable for any errors in this information or any actions taken by you in reliance upon this information.
None of the performance information displayed on this page is based on the actual performance of any Interactive Advisors client account investing in this portfolio. The performance in an Interactive Advisors client account invested in this portfolio may differ (i.e., be lower or higher) from the performance of the account managing this portfolio and portrayed on this page based on a variety of factors, such as trading restrictions imposed by the client (resulting in different account holdings), time of initial investment, amount of investment, frequency and size of cash flows in and out of the client account, applicable brokerage commissions (when commissions were charged), and different corporate actions. Clients investing in this portfolio may view the actual performance of their investment in this portfolio by logging into their Interactive Advisors account and reviewing their customized dashboard.
Not all transactions underlying the performance information displayed on this page will appear in accounts due to Interactive Advisors’ trading rules and individual client constraints. Eligibility of these securities is monitored periodically, and may change over time. Actual client investment holdings may vary.
Clients may restrict any of the securities traded in their account, but should note that any restrictions they place on their investments could affect the performance of their account leading it to perform differently, worse or better, than (a) the above-portrayed account managing the portfolio or (b) other client accounts invested in the same portfolio.
All graph data is as of the end of day for the referenced period, unless otherwise specified. The investment minimum is the minimum investment required to follow a particular portfolio. The minimum amount is determined by Interactive Advisors, based on the characteristics of the underlying portfolio. It should not be considered as specific investment advice for your investment situation.
Interactive Advisors’ management of this portfolio and some of the information on this page relies on data from third-party sources, including third parties providing the model portfolio strategy or ESG score information, as applicable. While Interactive Advisors believes that the data it uses in its investment management processes is obtained from reliable sources, it did not audit or validate this data, which may contain errors.
Benchmark returns displayed in the performance graph upon selection are provided for illustrative purposes only and have been calculated by Interactive Advisors using daily adjusted close prices and include dividend income. Benchmarks available for display are selected based on overall strategy, trade history and other criteria. If you choose to display benchmark returns in the performance graph, be mindful of the fact that the performance, composition and volatility of the portfolio could vary significantly from that of the benchmark(s) available for display. There can be no assurance that a benchmark will remain appropriate over time and Interactive Advisors will periodically review the benchmark’s appropriateness and decide to use other benchmarks if appropriate. More information here. Interactive Advisors uses only investable ETFs as benchmarks. Investable ETF returns reflect the deduction of (i.e., are net of) management fees, transaction costs and expenses.
Transaction history is available upon request. Portfolio classifications are provided by Interactive Advisors, and are intended to serve as a general guide.
In addition to Interactive Advisors' management fees, clients will also be charged management fees and other expenses (custodian fees, brokerage commissions, and legal and accounting fees) by ETF issuers if the portfolio contains ETFs.
Quarterly, monthly or more frequent rebalances in this portfolio (as applicable) will result in numerous transactions in many or all the stocks or ETFs in the portfolio and the client accounts invested in this portfolio. Clients could be required to report some or all of these periodic rebalance trades on their tax forms. Clients should consult an accountant or tax attorney on tax matters as Interactive Advisors does not provide tax advice or prepare tax documents for its clients. Interactive Brokers LLC provides certain tools to assist you with your tax filings, but these tools may only be able to support a limited number of trades.

How we trade

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Interactive Advisors manages this portfolio by trading its own funds in a separate firm-owned brokerage account and replicating this trading in the accounts of investing clients as follows:

Interactive Advisors initially funds and trades a fixed amount of its own funds in a separate brokerage account associated with this portfolio based on internally generated data;
Interactive Advisors replicates the trading in this brokerage account in the accounts of clients investing in this portfolio in order to implement its replication-based investment process; and
Based on internally generated data, Interactive Advisors periodically rebalances this portfolio to maintain target allocations, resulting in rebalancing transactions in investing clients’ accounts.

How to invest

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To invest in this portfolio, Interactive Advisors clients must:

Sign an Investment Management Agreement with and become clients of Interactive Advisors;
Consent to trading with another Interactive Brokers LLC client who is a liquidity provider in order to be able to buy and sell fractions of ETF shares and stocks, which do not trade on the open market. Interactive Advisors clients may revoke this consent at any time but, if they do, they will no longer be able to invest in this portfolio. (Clients can see these fractional trades with the liquidity provider listed and identified on the periodic activity statements they receive from Interactive Brokers LLC); and
Obtain the minimum risk score required for each portfolio and acknowledge certain risk disclosures.

Small Cap Value

Performance Chart

Metrics

Performance info

Risk metrics (last 365 days) info

Manager

IA Smart Beta

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Disclosures