This article was first published on 6 September 2019 and updated on 10 April 2021 to reflect Syfe’s latest fees and additional portfolios that have been launched. Additional updates by Timothy Ho. This article contains affiliate links. DollarsAndSense may receive a share of revenue from your sign-ups.
The rise of robo-advisors is apparent not just in Singapore, but also in many other countries globally such as USA and Canada.
Here in Singapore, investors have more than 10 different robo-advisors to choose from. Two prominent robo-advisory platforms known by many are AutoWealth and StashAway, which were amongst the first in the field. Other FinTech companies competing in the robo-advisory field include Endowus, FSM MAPS and MoneyOwl. You can read up more about what these companies by following the respective links.
Syfe was launched in July 2019 so they are comparatively younger compared to the rest. However, they have been extremely popular with many retail investors in Singapore. Here are 6 things to know before investing with them.
#1 Syfe – The Latest Entrant To Singapore’s Robo-Advisory Space
Syfe is a digital wealth manager that launched in Singapore in July 2019 after raising $5.2 million in seed funding, led by UK-based venture capital fund Unbound. They also received the capital markets services (CMS) license from the Monetary Authority of Singapore.
The company was founded by Dhruv Arora, who was previously a Portfolio Trader at UBS Hong Kong and went on to become a Director and lead UBS’s ETF efforts in the region. Since 2018, Syfe has been building a platform that will appeal to passive investors, enabling their customers to grow their savings through an automated platform that is both easy to use and affordable.
#2 A Risk-Managed Passive Investing Approach
The cornerstone of Syfe’s methodology is to manage risks first over returns.
The company focuses on risk management to provide investors with customised investment portfolios based on their individual risk profiles, rather than focusing on returns. This means that the platform optimises returns while maintaining your selected level of risk, so you enjoy better risk-adjusted returns across all market conditions.
Your portfolio is determined by your downside risk. This downside risk represents the maximum amount of money you can potentially lose. This downside risk can be changed anytime. For example, perhaps your downside risk is 15% today, but you discover that you have a kid coming along and decide that you want to lower this downside risk to 10%. This can be done easily on the platform, which will result in your portfolio possibly being rebalanced.
Syfe uses Automated Risk-managed Investments (ARI) strategy, their proprietary investment methodology, which combines two leading approaches – Global Market Portfolio (GMP) and Risk Parity Portfolio (RP). ARI automatically adjusts your portfolio to ensure enhanced risk-adjusted returns by managing your portfolio’s downside risk, which is based on stress testing across the last 15 years.
You can find out more about how ARI works here.
#3 An Investment Portfolio Built With Exchange-Traded Funds (ETFs)
When you invest with Syfe, your portfolio is built using Exchange-Traded Funds (ETFs) that are globally diversified across asset classes, sectors and geographies. ETFs have become a popular investment vehicle over the past few years. ETFs give you diversification into many different companies even with a relatively small investment amount.
The asset allocation is determined using the ARI algorithm which monitors your portfolio and rebalances when necessary to keep your portfolio risk aligned with your risk appetite.
A quick search shows that your portfolio with Syfe will comprise of more than 20 ETFs. Syfe selects ETFs that are liquid, with low expense ratios to minimise costs and maximise returns. Currently, Syfe only invests your money into ETFs that are listed on the US stock exchange. This also means that Singapore listed securities are not amongst their product offerings.
For non-U.S. tax residents, dividends and bond coupons for certain ETFs will be subjected to a withholding tax of 30% under U.S. Internal Revenue Service (IRS) regulations.
#4 Syfe Offers Multiple Investment Portfolios That You Choose To Invest In
Over the past one and a half years since they launched, Syfe has also launched multiple robo-investment portfolios that give investors the option to choose the markets or sectors that they prefer to invest in.
Syfe REIT +: One such popular portfolio would be the Syfe REIT +, which is currently the only REITs-focused robo-advisory product that invests in REITs. Syfe REIT+ balances the potential volatility of REITs investing with risk management. It allocates a portion of the funds to Singapore government bonds according to their in-house algorithm to reduce your risk exposure. This would reduce the likelihood and severity of your REITs portfolio crashing during times of market volatility such as during March 2020. Syfe also offers a REIT portfolio that allows you to allocate 100% of your investments into REITs. This means that Syfe’s ARI algorithm will not be deployed to provide risk management for the portfolio.
Syfe Equity 100: The Syfe Equity 100 is a fully-managed portfolio that puts 100% of your investment monies into equities (i.e. stocks). You get access to a well-diversified global portfolio of over 1500 stocks in the world’s leading companies via the Exchange Traded Funds (ETFs) that it invests in. These include the Invesco QQQ Trust, which tracks the NASDAQ 100 index, and the iShares Core S&P 500 UCITS ETF, which tracks the S&P 500. Equity100 puts all your money into equities only. So while it’s a very well-diversified equity portfolio, but ultimately, everything is in stocks only.
Syfe Core: To address the needs of investors who want the equities exposure while reducing the downside risks, there is Syfe Core, a suite of 3 portfolios – Core Defensive, Core Balanced and Core Growth – which maximises risk-adjusted returns. Syfe Core does this by using equity ETFs, bond ETFs and gold ETF to create their portfolios. The equity component of the portfolio helps investors generate the high returns they want using the Smart Beta methodology, while the bond and gold components provide the portfolio with downside protection.
Syfe Cash +: Syfe Cash+ enables us to earn a higher interest rate either by taking on slightly higher investment risk and offers us a similar level of liquidity as bank accounts, allowing us to withdraw our funds with no lock-up. This makes it a fuss-free alternative to high-yield savings accounts. Syfe Cash+ has 3 underlying funds: LionGlobal SGD Money Market Fund (30% allocation), LionGlobal SGD Enhanced Liquidity Fund (35% allocation), and LionGlobal Short Duration Bond Fund (35% allocation).
#5 What Are The Fees Involved?
You cannot control your portfolio’s performance, but you can control the fees you pay.
No matter what type of investment you make, all investments come with some form of cost or fee, such as transaction costs, management fees and administrative charges. However, what’s important is to keep these costs low as they inevitably eat into your investment returns.
Investors these days have a wealth of resources available online, allowing them to read up on the types of investments available as well as the fees incurred. With numerous fintech companies being able to provide their investors with low fees, to effectively compete in the robo-advisory space, offering competitively low fees is important.
Syfe charges between 0.4% to 0.65% per year, depending on your invested amount across all portfolios. This all-inclusive management fee gives you unlimited, free withdrawals and unlimited rebalancing. It is calculated on a daily basis and billed at the end of each month. Should you withdraw your balance before the end of the month, you pay only for the days your money was managed by Syfe.
Syfe does not charge transaction or brokerage fees. However, there are other fees and charges apart from Syfe’s 0.4% to 0.65% per year fees to take note of. This includes:
- Securities and Exchange Commission (SEC) fees of 0.0013% when selling (charged by SEC)
- ETF Management Fees reflected in the prices of your ETFs average to about 0.15% (charged by the ETF manager)
- Currency conversion charge at 0.10% on the amount converted (charged by Broker, SAXO)
#6 Funding Your Syfe Account
You can fund your Syfe account in both Singapore Dollar (SGD) and U.S. Dollar (USD). You can also top up your Syfe account anytime and the funds will automatically be invested the next day. Funds in your Syfe account are held in a Trust Account in DBS Bank while your investments are held in a Custodian Account through Saxo Capital Markets.
To open an account with Syfe, you will first be tasked to complete your risk profile. Through this risk profiling, Syfe will also get a better understanding of your investment objective, financial situation, investment expertise, how much you need to achieve your goal and most importantly, your downside risk.
There is no minimum amount for investors to start investing with Syfe. There is also no minimum holding or lock in periods for investing with Syfe. This means that you can withdraw your funds at any time with no withdrawal fees charged.
Just like investing with any other robo-advisor, look out for promotions that the robo-advisor is running.
If you are interested to get started on investing with Syfe, DollarsAndSense has an exclusive partnership with Syfe – enjoy 0% management fee for the first $30,000 during the first 6 months after you sign up. Apply here to enjoy the promotion.