Making its debut on 02/28/2017, smart beta exchange traded fund Inspire Small/Mid Cap ETF (ISMD) provides investors broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
ISMD is managed by Inspire, and this fund has amassed over $333.79 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the Inspire Small/Mid Cap Impact Equal Weight Index before fees and expenses.
The Inspire Small/Mid Cap Index selects securities from a universe of publicly traded, domestic small and mid-capitalization equity securities of companies which have an Inspire Impact Score of zero or higher.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.53%.
It's 12-month trailing dividend yield comes in at 1.10%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
ISMD's heaviest allocation is in the Industrials sector, which is about 17.2% of the portfolio. Its Information Technology and Financials round out the top three.
Looking at individual holdings, Agilon Health In (AGL) accounts for about 2.07% of total assets, followed by Bbh Sweep Vehicle (BBHETFMM) and Maxlinear (MXL).
Its top 10 holdings account for approximately 7.57% of ISMD's total assets under management.
Performance and Risk
The ETF has added roughly 30.26% so far this year and it's up approximately 39.57% in the last one year (as of 07/17/2026). In the past 52-week period, it has traded between $35.10 and $50.00
The ETF has a beta of 1.02 and standard deviation of 19.48% for the trailing three-year period. With about 499 holdings, it effectively diversifies company-specific risk .
Alternatives
Inspire Small/Mid Cap ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard ESG U.S. Stock ETF Shares (ESGV) tracks FTSE US ALL CAP CHOICE INDEX and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. Vanguard ESG U.S. Stock ETF Shares has $13.25 billion in assets, iShares ESG Aware MSCI USA ETF has $17.83 billion. ESGV has an expense ratio of 0.09% and ESGU changes 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend
Bottom Line
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Inspire Small/Mid Cap ETF (ISMD): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).