Smart beta’s moment

Smart beta strategies are one of the hottest trends in investing.

Assets under management have jumped more than 200% since 2012 to about $866 billion in May, according to data compiled by Morningstar cited by the Financial Times.

According to the fourth annual FTSE Russell Global Institutional Smart Beta Survey, 46% of major global asset owners have exposure to smart beta strategies.

That’s a 10% advance over last year’s mark.




Our Lineup

Interactive Brokers Asset Management Smart Beta Portfolios are carefully constructed baskets that rank stocks by traits other than their market value, the standard methodology employed by traditional benchmarks, such as the Standard & Poor’s 500.

Instead, these products focus on “factors,” such as growth, value, dividends, volatility or other financial metrics that offer the possibility of market-beating performance and reduced portfolio risk.


Due Diligence

Investors looking for potentially enhanced returns and reasonable fees may want to give smart beta strategies a serious look.

Like any other financial product, however, investors need to carefully weigh the pros and cons.  Smart beta strategies aren’t for every investor.

Yet, if you’re interested, we’re here to help. Here are some potential advantages of IB Asset Management’s Smart Beta Portfolios worth considering:

Low Cost: With an 8 basis point management fee, our 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 Interactive Brokers Asset Management 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 Ltd. doing business as Interactive Brokers Asset Management, or try our services with a free trial account.


Photo Credit: tanell_85 via Flickr Creative Commons

Author profile

IB Asset Management
IB Asset Management
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.