Firm Description and History
Smartleaf Asset Management, LLC (“Smartleaf Asset Management” or “SAM”) is a fee-based, registered investment
adviser with its principal place of business located in Boston, Massachusetts. The firm was established in June 2014 as a
Delaware limited liability company whose sole owner is Smartleaf, Inc. (“Smartleaf”) and the sole managing member is
Gerard Michael. SAM has 12 employees including four investment advisory professionals. The Chief Compliance Officer is
Diana Neuss. The team has over 40 years combined experience in the financial services industry. The firm currently has
several service providers for administrative and technical support. For more information about SAM’s investment advisor
representatives please consult the ADV Brochure Supplement.
Business Summary
SAM provides two types of advisory services: (1) sub-advisory portfolio management services that leverage the scale,
customization and tax management capabilities of the portfolio management system developed by Smartleaf, (2) Direct
Index (“Core”) Models as described below.
SAM derives its revenues from investment advisory fees only. Fees are calculated as a percentage of the assets under
management (“AUM”) in the sub-advisory accounts or, in the case of Direct Index Model clients, by the assets under
management in accounts managed pursuant to the model. The fees for the sub-advisory accounts are typically directly
debited from the sub-advisory clients’ custodial accounts as authorized by the client. The firm does not receive any
commissions or other compensation in connection with its services. No cash payments or other benefits (e.g., “soft dollars”)
are received from custodians or broker-dealers based on client securities transactions. SAM’s parent, Smartleaf, and its
technology affiliates may receive subscription fees from SAM or from clients that use their technology, data and/or non-
investment advisory data processing services.
For more information regarding our investment philosophies and the risks of our strategies and/or specific investments
recommended, please refer to the next section – Types of Advisory Services.
SAM actively seeks to avoid, or at least minimize, conflicts of interest which may exist between the firm and its clients.
Conflicts of interest will be disclosed to clients and managed, to the extent feasible in the context of SAM’s business model
and operational capabilities, in the best interest of the client. In those instances when unavoidable conflicts of interest
arise, we have adopted policies that seek to incorporate and address the client’s best interests.
Sub-Advisory Portfolio Management
Smartleaf Asset Management’s primary purpose is to support providing investors with high levels of personalization and
tax optimization.
Smartleaf Asset Management offers sub-advisory portfolio management services to third-party advisors (“Advisors”) who
manage discretionary accounts. SAM enters into a sub-advisory agreement with the Advisor whereby the Advisor appoints
SAM to manage all or a portion of its client’s accounts utilizing portfolio management software created by its affiliate
Smartleaf. SAM has no direct relationship with the Advisor’s clients, and the Advisor is solely responsible for determining
the suitability of the parameters given to SAM for management of each account.
SAM offers Advisors using the Sub-Advisory Service extensive asset allocation, product choice, customization and tax
management options, detailed below.
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Trading decisions for each account are highly customized, depending on each account’s assigned asset allocations and
models, customization settings, tax management considerations, and legacy holdings. As a result, it is possible that the
same security may be purchased for some accounts and sold for other accounts on the same day.
Separately Managed Accounts or Holistically Managed Accounts
SAM manages, on a sub-advisory basis, holistically managed accounts meaning accounts that are managed as a whole,
without use of subaccounts, targeted to follow composite models comprised of combinations of mutual funds, exchange
traded funds (“ETFs”), cash, the Advisor’s equity models and third-party (“open architecture”) equity models.
SAM can also manage, on a sub-advisory basis, separately managed accounts (“SMAs”), meaning accounts, or
subaccounts, targeted to follow a single equity model provided by the Advisor or sourced from a third-party.
Access to Third-Party and Direct Index Models
For both UMAs and SMAs, SAM
provides Advisors with access to third-party models through the model hub of its parent,
Smartleaf. These third-party model providers may charge an additional fee for the use of their models. SAM passes this
cost through to the Advisor. The model hub that SAM makes available to Advisors includes direct index models – models
designed to track an index, usually at lower cost than comparable actively managed models. The model hub includes direct
index models from third parties, as well as SAM’s own “Core Models” which are direct index models, as described below.
Custom Asset Allocation
SAM manages accounts in accordance with asset allocations set by the Advisor. Advisors provide SAM with a set of
standard asset allocations, e.g., “Conservative” or “Aggressive Growth,” which the Advisor may update as the Advisor sees
fit. SAM itself does not create or recommend asset allocations, though it may make asset allocation models available from
third-party providers through the Smartleaf model hub.
The Advisor assigns each account an asset allocation from this predefined list. The Advisor may then customize the asset
allocation of any account, as supported by the Smartleaf Portfolio Management software.
For each asset class in their asset allocations, Advisors specify their desired investments– any combination of mutual
funds, ETFs, and direct investment in individual securities based either on the Advisor’s proprietary equity models and/or
equity models from third parties. Advisors may customize the type of investments in each asset class for each account.
SAM does not recommend specific investments or products, though it may make its Core Models available to the Advisor,
along with equity models available from third-party providers through the Smartleaf model hub.
Environmental, Social and Governance (ESG) Customization
SAM provides Advisors with extensive Environmental, Social and Governance (ESG) constraint options, e.g., Catholic
Values,” “Sharia” or “Environmental,” for each account.
Glide path
Advisors may set up multi-year “glide paths” for each account, wherein the desired risk characteristics of the account
change over time, e.g., moving from “Aggressive Growth” to “Conservative” over a 20-year period.
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Tax management
The advisor may set numerous tax management parameters for each account, including:
• Tax rates
• Tax budget
• Loss harvesting preferences
• Gains deferral preferences
Other customization options
SAM offers the Advisor additional customization options for each account, including security constraints and custom cash
management parameters.
Core Models
SAM’s Core Models are direct index models, which means they are designed to track the performance of a selected equity
index with a smaller number of securities than the index.
SAM currently offers twelve Core Models:
NAME BENCHMARK
APPX # OF
HOLDINGS
SCM - S70 Large Cap Index S&P 500 70
SCM - S125 Mid Cap Core Index S&P 400 125
SCM - S150 Large Cap Index S&P 500 150
SCM - S150 Large Cap Growth Index S&P 500 Growth 150
SCM - S150 Large Cap Value Index S&P 500 Value 150
SCM - S150 Mid Cap Growth Index S&P 400 Growth 150
SCM - S150 Mid Cap Value Index S&P 400 Value 150
SCM - S200 SMID Cap Core Index S&P 1000 200
SCM - S200-All Cap Core Index S&P 1500 200
SCM - S300-Russell 1000 Core Index Russell 1000 0
SCM - S400-Russell 2000 Core Index Russell 2000 0
SCM - S400-Russell 3000 Core Index Russell 3000 0
SAM may also create customized models for use by individual clients.
SAM’s Core Models are distributed to clients (“Model-Only Clients”) through Smartleaf’s model hub, which also includes
index- based and active models from third parties which are made available to users of Smartleaf’s portfolio management
overlay software. whose sole relationship with SAM is the purchase of the Core Models. Fees for Core Models are based
on the AUM of the Model-Only Client’s accounts that are managed pursuant to the Core Models.
Wrap Fee Programs
Smartleaf Asset Management, LLC does not manage assets under wrap fee programs or manage assets for any wrap fee
accounts.
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Types of Investments
SAM’s investment programs are limited to US publicly traded mutual funds, ETFs, ADRs and equities.
Client Assets Under Management
As of December 31, 2023, SAM has $2,691,262,439.00 of discretionary assets under management.