Launched on 02/28/2017, the Inspire Small/Mid Cap ETF (ISMD) is a smart beta exchange traded fund offering 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
The fund is managed by Inspire, and has been able to amass over $253.58 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Inspire Small/Mid Cap Impact Equal Weight Index.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for ISMD are 0.57%, which makes it on par with most peer products in the space.
ISMD's 12-month trailing dividend yield is 1.16%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 17.8% of the portfolio. Financials and Information Technology round out the top three.
Taking into account individual holdings, Bbh Sweep Vehicle (BBHETFMM) accounts for about 0.47% of the fund's total assets, followed by Ultra Clean Hold (UCTT) and Skywater Technol (SKYT).
Its top 10 holdings account for approximately 3.1% of ISMD's total assets under management.
Performance and Risk
The ETF has added about 4.04% so far this year and is up roughly 17.24% in the last one year (as of 03/11/2026). In the past 52-week period, it has traded between $29.72 and $42.84
The ETF has a beta of 1.01 and standard deviation of 19.73% for the trailing three-year period. With about 502 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 $11.55 billion in assets, iShares ESG Aware MSCI USA ETF has $15.55 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
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Inspire Small/Mid Cap ETF (ISMD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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