Roboadvisors have become a popular mode of investment among the millennials. They provide convenience, simplicity and performance at low fees. Coupled with mobile-first design and intuitive UI/UX, it is very much appreciated by digital native millennials today.
Syfe is definitely one of the noteworthy roboadvisors in Singapore. What I like about them is their multi-factor approach to investing – this is something I believe in as it is a more assuring way to achieve higher returns than most subjective analyses.
A quick introduction to “Factors” – they are basically proven characteristics of stocks that deliver higher returns. There is tons of research to back these up with evidence. Some common factors are value, profitability, momentum and size.
In a nutshell, picking stocks that exhibit one of these factors would give you a higher chance of achieving market beating returns.
100% stocks get both returns and volatility
Syfe offers many portfolios that allow you to invest easily in Singapore but the Equity100 is the most interesting to me for two reasons. First, I’m a stocks person and am willing to stomach the high volatility that comes with 100% exposure to stocks, in exchange for high long term returns. Second is the way that Syfe uses ETFs to build a customised smart beta fund for their clients. This is where Syfe’s craftsmanship comes to play.
To many people, an ETF is an ETF. There is more to it. You can identify certain factors that an ETF is exposed to if you understand factor investing. Syfe definitely knows their stuff. I learned about this when I spoke to their founder, Dhruv about the Equity100 portfolio. My initial impression was that Syfe used smart beta ETFs or factor funds right off the shelf, but Dhruv explained that Syfe uses a combination of ETFs that express their factor convictions.
This is commendable as Syfe is value adding by building a smart beta portfolio using relevant ETFs to form a blend of factor exposure. This is why they are worth the fees they charge – there is real expertise and effort behind the monitoring and selection.
Factors change, so should the portfolio
Another important aspect about factors is that the best performing factor changes periodically, like playing musical chairs. One year it could be growth and another it could be value. 2020 and 2021 were good examples of this transition, which the market described as sector rotation.
Knowing this, Syfe isn’t static with Equity100. They adjust the portfolio twice a year to weigh on the factors that are performing. This is to help you get better risk-adjusted returns as consistently as possible.
For instance, you can see the latest adjustments to the Equity100 portfolio in the table below:
Syfe decided to underweight growth and tech exposure by reducing the position in Invesco QQQ Trust from 30.2% to 20%.
That said, it is still the largest position, even after the reduction. Syfe explained that there’s a fundamental shift to greater technology adoption, hence the portfolio cannot afford to dismiss it.
A 17% allocation went into Invesco S&P 500 Equal Weight ETF. To the novice this may sound like another S&P 500 ETF. But in actual fact, this is a tilt towards value and small companies within the S&P 500 index.
Indices are mostly market weighted, that means the bigger companies get more weightage. But an equal weight in 500 stocks means 0.2% exposure to each of them, including the largest stock, Apple Inc. Syfe’s rationale is that the large cap and growth factors may not work as well going forward.
Another significant new allocation in the Equity100 portfolio are the China ETFs. Previously there were none. Now we see iShares MSCI China ETF and KraneShares CSI China Internet ETF in the portfolio. That’s a 16.2% exposure in total. Syfe quoted a few reasons. First, the backtesting of sector and geographical factors validated the selection. Second, it provides a good diversification to China, other than which it has always been a US centric portfolio. Third, Syfe believes that China equities would outperform going forward.
I am also bullish in China and have always believed that investing in both US and China equities is a better solution than trying to take sides.
Performance of Equity100
Other than ease of use and the investing strategy employed, investment performance is what investors would look out for.
Syfe reported a 14.2% annual return for its Equity100 portfolio on its website. But I was more interested in the actual results so I asked around and got the performance from a real investor.
Here’s the screenshot he sent me:
He tested with $500 in Nov 2020 and it has returned 16.13% in 6 months. That’s a pretty good return for zero effort.
You may be able to find stories about others achieving higher returns than this for the same period, but it is also important to know how much effort and risk were taken to reach there. I believe 16% in 6 months would have beaten many DIY investors. Moreover he just left it on autopilot!
He told me he likes the way the app shares all the transactions done in the portfolio as the transparency builds trust in the investment process. He knows what Syfe is doing but at the same time he isn’t bogged down by all the buy and sell decisions that he would have to make if he invests on his own.
Enjoy 6 months of free investing!
Of course historical performance is not indicative of future returns and it is better to accept what the market is willing to give than to have an expectation.
Nonetheless, roboadvisory is one of the cheapest and convenient ways of investing. Why not give it a try if what I have described so far would help your situation?
Syfe charges a reasonable 0.65% management fee per year. You can reduce the fee to 0.5% or 0.4% if you invest minimally $20,000 or $100,000 respectively.
The good news is that Syfe is willing to offer Dr Wealth readers 6 months of free investing! You can try it risk free and experience it for yourself. Use the code DRWEALTH to get your first $30,000 deposit managed free for 6 months.
There’s no minimum so you can test whatever amount you are comfortable with. There’s no lock-in period and you can withdraw anytime without any fees.
This article is sponsored by Syfe but the opinions belong to the author.
This article risks misleading readers. It is a simple thing to choose the best performing fund over a favourable time period to lookback and show good results. This says nothing about whether the platform is a good one and may cause investors to lose money. An all equity fund does well of course when equity markets are booming but did you ask them about their other funds which have been underperforming the overall market?
I have had different results. I invested in their flagship ARI fund as well as their REITs fund towards the beginning of the year. Both have been underwater for months.
Even though it is a sponsored post, I think it should be written in a more balanced and responsible manner.
thanks for sharing. i agree a few months is too short to determine the good and bad of a roboadvisors. Risk parity didnt do well last year so it is not surprising u seen losses. If few months is too short to judge the profits, it is also too short to judge the losses.
And for clarifications, we covered Equity100 because it was the specific brief from Syfe. And the results was not supplied by them. I asked someone who has done it to share. I noticed there is at least one more blogger covering another portfolio by Syfe. You can check it out.
Yes, I agree that a few months isn’t enough to tell success or failure.
That is why I am uncomfortable with the way the article was written. It seems to give the reader the impression that the 100% equity portfolio is a free lunch, make good returns for zero effort. In fact, the effort is in taking the high risk of putting funds into a 100% equity portfolio, one of the riskiest investment strategies and one not recommended by almost every financial advisor. I feel there was far too little focus on the risks involved in such a portfolio which does a disservice to an uninformed reader. No doubt it was a sponsored article but still, the way it was written was so hyped up as a marketing article that it severely dents your credibility. Given all other good articles I have seen you write, I was surprised you would write such an unbalanced piece.
i think it is a problem of mental accounting. when someone put 100% in a stock portfolio under a roboadvisor. usually it is just a small fraction of his or her networth. It seems risky for the account but it is not if you take things in totality. The average household asset allocation in Singapore tells you that most people dont take enough risk. 40% in house. 20% in CPF. 20% in savings.
The article was on a specific investment product, not about portfolio allocation.
So the risks involved in that particular product is what matters, not overall portfolio allocation and the article failed to warn readers about the risks involved in that product and instead hyped it up as one which could provide high returns without doing any work.
If this were not a sponsored article, I believe it would have been written very differently and not in such an irresponsible fashion.
While I understand the positive bias that comes with sponsored articles, in this case, it went too far to the point of potentially causing readers to make costly financial mistakes.
Rather than trying to justify the article, I suggest reflecting on whether you had the balance correct. Credibility and trust is built up over long periods of time but can be destroyed in an instant. I wish you well.
At least use a real identity to reply
I choose to remain anonymous but that doesn’t detract from the content of what I am writing about. Engagement should be on the content of what is written, not the individual.
Rest assured I am not a competitor and am writing solely as a regular reader of your website.