Syfe, a digital wealth management company licensed by the Monetary Authority of Singapore (MAS), has today announced the launch of Equity100, an all-equity portfolio for investors who want to maximise their exposure to global stocks.
Equity100 is built on the principles of global diversification and a smart beta approach that the team at Syfe has constructed. It is designed for investors who are willing to face periods of significant share price volatility to achieve higher risk-adjusted returns over the long-term.
Equity100 uses a number of broad-based ETFs to provide global market exposure and international diversification. These ETFs capture the broad US market, as well as developed and emerging markets from across the world:
• SPDR S&P 500 ETF (SPY). The SPY tracks the performance of the S&P 500 index, a diversified large-cap index that holds 500 US-listed companies across 11 sectors from Information Technology, Healthcare, Consumer Staples, to Financials. The top holdings of the SPY are Microsoft, Apple, and Amazon.
• iShares Core S&P Mid Cap ETF (IJH) and iShares S&P 600 Small Cap ETF (IJR). The IJH provides exposure to US mid-cap stocks while the IJR provides exposure to US small-cap stocks. These stocks tend to be smaller and less well-known than their counterparts on the S&P 500 index. Both IJH and IJR are diversified across various sectors. Their top holdings include Tyler Technology, Factset Research, Wingstop, and Topbuild Corp.
• iShares MSCI EAFE ETF (EFA). The EFA tracks the performance of the MSCI EAFE index, which holds more than 900 large- and mid-cap developed market stocks from a broad range of companies in Europe, Australia and Asia. EFA does not hold stocks from the US and Canada. The top holdings of EFA are Nestlé, Astrazeneca, Toyota, and LVMH.
• iShares Core MSCI Emerging Markets ETF (IEMG). The IEMG tracks the performance of the MSCI Emerging Markets Investable Market Index. The index holds more than 2,000 large-, mid- and small-cap stocks from emerging market countries, including China, South Korea, India and Brazil. Top holdings of IEMG include Alibaba, Tencent, Samsung, and Reliance Industries.
On top of global diversification, Syfe layers on a smart beta approach, which is a strategy that seeks to capitalise on certain performance factors to deliver higher risk-adjusted returns. Smart beta draws on a wide range of academic research that postulates how certain factors drive investment returns. Based on Syfe’s research and analysis, its team found that growth stocks have outperformed value stocks in recent years. Similarly, large-cap stocks have outperformed small-cap stocks. It also found that low-volatility stocks – stocks that generate steady, positive returns without wild price swings – have performed well.
These factors Syfe has identified – growth, large market capitalisation, and low volatility – form the basis of its multi-factor smart beta approach. To implement this strategy, Syfe selects ETFs that best represent these factors and overweighs them in the Equity100 portfolio. This means that Syfe’s smart beta approach will tilt the Equity100 portfolio toward growth, large-cap and low-volatility factors.
To give the Equity100 a growth and large-cap tilt, Syfe has included the Invesco QQQ ETF, for instance:
• Invesco QQQ. The QQQ tracks the performance of the Nasdaq-100 Index. The index includes 100 of the largest US and international non-financial companies listed on the Nasdaq Stock Market. The index is diversified across seven sectors with Information Technology, Communication Services, and Consumer Discretionary as the top three sector allocations. Top holdings of QQQ include Apple, Microsoft, Amazon, Facebook, and Alphabet.
The low-volatility tilt is achieved by selecting four sector ETFs – Consumer Staples, Healthcare, Utilities, and Materials. These sectors have been chosen because they collectively generate the highest risk-adjusted returns for the lowest amount of volatility on a portfolio basis:
• Consumer Staples Select Sector SPDR Fund (XLP). The XLP provides exposure to companies from the food and staples, beverage, tobacco, household product and personal product industries. Top holdings include Procter and Gamble Company, Coca-Cola, Walmart and Mondelez.
• Health Care Select Sector SPDR Fund (XLV). The XLV provides exposure to companies in the pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology industries. Top holdings include Johnson & Johnson, Merck & Co., Pfizer Inc., and Abbott Laboratories.
• Materials Select Sector SPDR Fund (XLB). The XLB provides exposure to companies in the chemical, construction material, containers and packaging, metals and mining, and paper and forest products industries. Top holdings include Linde, Air Products and Chemicals Inc., Ecolab, Sherwin-Williams Company, and DuPont.
• Utilities Select Sector SPDR Fund (XLU). The XLU provides exposure to companies from the electric utility, gas utility, multi-utility, and independent power producer and energy trader industries. Top holdings include NextEra Energy, Dominion Energy, Duke Energy Corporation, and Southern Company.
The Equity100 portfolio is a natural extension of Syfe’s current portfolio offerings, which include its Global portfolio and REIT+ portfolio. As the company’s customer base grows and becomes increasingly diverse, Syfe aims to provide portfolio options that can meet the needs of customers with varying investment preferences and risk appetites.
The advantage of Equity100 over a DIY approach to ETF investing is cost efficiency. Syfe’s $0 brokerage charge and $0 withdrawal fee makes the portfolio ideal for investors who wish to invest regularly. Its fees start from 0.4 percent per annum.
Equity100 can be used as a standalone portfolio or as part of a core-satellite investing approach, whereby customers use Syfe’s Global portfolio – which is diversified across equities, bonds and gold – as their “core” investment, and the Equity100 as a “satellite” diversifier.
Syfe is currently offering free consultation with its dedicated financial advisors, who can provide personalised investment advice to help individuals achieve their financial goals. New customers can enjoy up to SG$100 cash bonus when they sign up using the code SYFEBONUS.