Syfe recently launched their 100% equity portfolio Equity100 that helps investors build a globally diversified portfolio with global equity ETFs managed by Vanguard, Blackrock and State Street.
The ETFs that come in their newest product are:
- Invesco QQQ Trust (QQQ)
- iShares Core S&P 500 UCITS ETF (CSPX)
- iShares Core S&P Mid Cap ETF (IJH)
- iShares S&P 600 Small Cap ETF (IJR)
- iShares MSCI EAFE ETF (EFA)
- iShares Core MSCI Emerging Markets ETF (IEMG)
which will collectively invest in more than 1500 companies around the world including Europe, Asia and emerging markets like China and India.
Similar to StashAway’s approach, they construct the portfolio using the most liquid and cost-effective ETFs (usually domiciled in the US).
The ETFs are selected based on factor-tilting
Syfe’s Equity100 portfolio is constructed based on a multi-factor tilt towards factors such as growth, large-cap and low-volatility. However, while these factors are different from the ones identified from the Fama-French 3 factor model, they are identified by their investment team to generate higher risk-adjusted returns through a dynamic factor selection model.
The growth tilt is accomplished with QQQ which tracks the Nasdaq 100 Index and is weighted towards large-cap growth stocks (usually tech stocks like Amazon, Facebook etc).
Their low-volatility tilt is accomplished with some sector ETFs like consumer staples (XLP) and healthcare (XLV), which invests in largely stable and resilient companies especially during cyclical downturns.
Read also: Why you should consider factor investing
Why you might be interested in their Equity100 portfolio
Syfe’s Equity100 portfolio is 100% invested in equities, there are no bonds to stabilize the portfolio so it’s suitable for investors who want to invest in global equity ETFs without incurring transaction costs.
To recreate this portfolio by yourself through DIY, you might need to incur brokerage fees and hit the minimum lot size for each ETF. Investing through Syfe also allows you to own fractional shares of the ETFs to maximise your investment dollars.
Personally, I see this portfolio suitable for two groups of investors:
- You have a large Singapore equity holding and you want to diversify globally
- You want to DCA into global ETFs without any bond/gold allocation
You have a large Singapore equity holding and you want to diversify globally
If you have a SGX-heavy portfolio, then diversifying globally with a 100% equities portfolio might make sense, given how the STI is heavily focused on banks and real estate and might not provide sufficient diversification benefits.
You want to DCA into global ETFs without any bond/gold allocation
For investors who also want to dollar cost average (DCA) into global ETFs, but don’t want to own other assets like bonds and gold, then their 100% equities ETF might be a good candidate for this purpose.
This can be helpful if you want to make incremental investments during a market crash, and you want to avoid incurring expensive transaction fees on your regular brokerage. With the diversification across multiple ETFs, you also get the added benefit of risk reduction.
If you’re keen on their newest product, you can check it out here.