Smart beta strategies have captured the imagination of investors, with assets under management now topping $500 billion.
And what about performance? Not so bad it turns out.
The average smart-beta fund gained 18% over the 12 months ended March 31, according to an analysis by Morningstar.
That topped the Standard & Poor’s 500 stock index, which gained 17.2% over the same period.
“To the extent that a lot of strategies are ways to get more exposure to small-company stocks and value stocks — they all take different paths — those bets have paid off in the past 12 months,” Ben Johnson, director of passive fund research at Morningstar, told InvestmentNews.com.
Remember, past performance is no guarantee of future success of course.
Yet, investors looking for potentially enhanced returns and reasonable fees may want to give smart beta strategies a serious look.
Smart beta ETFs are carefully constructed indexes that rank stocks by traits other than their market value, the standard methodology employed by traditional benchmarks, such as the Standard & Poor’s 500
The Covestor Smart Beta portfolios are calibrated for specific stock features and performance metrics designed to deliver a better risk and return trade-off.
Here’s why they are worth a serious look:
Low Cost: With an 8 basis point management fee, Covestor Smart Beta portfolios are competitive with existing products in the marketplace.
Low Minimums: Portfolios have low investment minimums of just $5,000 through use of fractional shares.
Factor Tilts: These portfolios are designed for exposure to desirable stock characteristics, or factors, such as robust growth, valuation, quality, and dividends that have been back tested. Portfolios are also well diversified across sectors.
Rules-Based: The Covestor Smart Beta portfolios have filters to screen out undesirable stocks and a repeatable rules-based framework to determine position allocations.
Auto-Rebalancing: Portfolios are rebalanced quarterly; stocks sold are replaced by new ones with more attractive characteristics.
Transparency: Investors have immediate, online access to information on holdings, trades and performance.
Interested in finding out more? You can learn more about Covestor, or try our services with a free trial account.
Disclaimer: Covestor’s Smart Beta Portfolios are not Exchange-Traded Funds or mutual funds but are portfolios made up of individual stock holdings. These portfolios mainly invest in stocks and may not be suitable for all investors. You may lose all or part of investments in these portfolios, and their past performance is no guarantee of future results. You may find additional information on the risks, conflicts of interest, applicable brokerage commissions, fractional shares, and limitations on investments and divestments associated with these portfolios (along with Covestor’s full disclosures) on the Forms and Agreements page at ibkram.com. Covestor Ltd. is an investment advisor registered with the Securities and Exchange Commission (“SEC”). Registration does not imply a certain level of skill or training. Brokerage services are provided to Covestor clients by Interactive Brokers LLC, an SEC-registered broker-dealer and member NYSE/FINRA/SIPC and a Covestor affiliate.
- IB Asset Management is a pioneer in online investing. IB Asset Management offers a variety of portfolios, including the Smart Beta portfolios, which are managed by IB Asset Management's Chief Investment Officer and Investment Management team. The “Smart Beta” approach to portfolio construction is grounded in academic research. The goal is to achieve an alternative risk-return profile which is more attractive than a simple capitalization-weighted index such as the S&P 500. IB Asset Management Smart Beta portfolios are designed to provide systematic exposure to a fundamental factor or combination of factors. Portfolios are constructed using a rules-based approach and offered at a relatively low cost.