This article was written in collaboration with Syfe. All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here. This article was originally published on 13 March 2021 and updated with new information.
Syfe, one of the popular robo-advisories in Singapore, has been busy launching investment solutions for investors. Following the successful launch of Cash+, their cash management account in January 2021, Syfe is back with a new portfolio solution: Syfe Core, which has 3 different portfolios to suit every investor.
For those of us who have already started investing with Syfe, we may be wondering about the difference between Syfe Core and the existing Equity100.
Equity100 Is Pure Play Equities (100% Investment In Stocks)
Syfe Equity100 is a fully managed portfolio that invests 100% of our monies into equities. Equity100 enables us to gain investment exposure to a highly diversified pool of 1500+ stocks through its underlying Exchange Traded Funds (ETFs). These ETFs are identified using Syfe’s Smart Beta strategy, which tilts the portfolio towards three key factors – growth, large market capitalisation and low volatility that the Syfe investment team has identified as factors that will generate better performance.
Unlike most other robo-advisory portfolios, Equity100 is designed to maximise returns. This means 100% of your funds are invested into equities. During a stock market crash, such as what happened in March 2020, the drawdown on Equity100 can be quite high as the portfolio is only exposed to equities and no other asset classes.
On the flip side, the 100% allocation to stocks also means that Equity100 can capture higher returns when the market is on a bull run. For investors who want to earn high returns in the stock market, and are willing to accept higher volatility, Equity100 may be a suitable portfolio for you.
However, not every investor may be keen to accept high volatility on their portfolio. This is where the Syfe Core comes in.
Syfe Core Provides Equities Exposure While Also Prioritising Risk-Adjusted Returns
To address the needs of investors who want the equities exposure while reducing the downside risks, Syfe has created 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.
Source: Syfe
Through their equity component, Syfe Core offers exposure to over 3,500 different companies from diverse sectors. Currently, the top equity allocations include tech stocks such as Apple, Microsoft and Google; China stocks such as Tencent and Alibaba; consumer staples and consumer discretionary such as Amazon, Procter & Gamble and PepsiCo; as well as Tesla.
Syfe Core Offers 3 Portfolios To Cater To Different Risk Tolerances
Every investor has a different appetite for returns and tolerance for risk. Syfe Core addresses this by offering 3 different portfolios: Core Defensive, Core Balanced and Core Growth. Each of these portfolios offer a different allocation to the underlying equities ETF, bonds ETF and gold ETF.
Core Defensive has the lowest equity exposure and highest bond exposure and is focused on long-term capital preservation. It is ideal for investors with less tolerance for volatility. Investors can also use Core Defensive for investments with a short-term time horizon where the priority is capital preservation, such as investing for a home deposit.
Core Balanced is between the two other options, with moderate equity and bond exposure. This is suitable for investors with moderate tolerance for risk and volatility, or investment goals that have a mid to long term time horizon, such as investing for children’s education.
Core Growth has the most equity exposure and is growth-oriented. The high equity exposure makes it more volatile but also means that the returns are higher over the long term. This is suitable for investors with high tolerance for risk and volatility or investment goals with a long time horizon, such as investing for retirement.
Source: Syfe
The different allocations to the non-equity components provide different degrees of downside protection to the different portfolios. For example, according to Syfe, the potential drawdown for Core Growth is 9.97% compared to Core Defensive’s 4.90%.
On the flipside, the higher equities exposure also leads to higher returns with Core Growth having a 13.2% five-year annualised return compared to Core Defensive’s 6.1%.
Source: Syfe
Both Syfe Core And Equity100 Use Smart Beta Allocation
Syfe uses their Smart Beta factor investing strategy for allocation in the equities component of Syfe Core. This is the same factor investing strategy present in Equity100. Currently, this is a tilt towards growth, a geographical tilt towards China and a tilt towards low volatility.
For the geographical tilt towards China, this includes iShares MSCI China ETF (MCHI) and KraneShares CSI China Internet ETF (KWEB). In line with greater exposure to Chinese stocks, Core portfolios have a greater geographical allocation to China. For example, Core Growth has a 14% allocation to China while Core Balanced has a 7% allocation.
For the tilt towards growth, Syfe has increased exposure through ETFs such as Invesco QQQ and Invesco S&P500 Equal Weight ETF (RSP). The QQQ is a technology-heavy ETF that tracks the performance of the NASDAQ-100 index while the RSP tracks the S&P500 on an equal-weighted basis. The addition of RSP adds a value factor tilt as each stock (including small-cap stock) is equally represented instead of being allocated according to their market cap.
As for the tilt towards low volatility, this exposure is through sector ETFs such as Consumer Staples Select Sector SPDR Fund (XLP), Health Care Select Sector SPDR Fund (XLV), Utilities Select Sector SPDR Fund (XLU) and Technology Select Sector SPDR Fund (XLK).
Mix And Match The Various Syfe Portfolios To Suit Our Preference
While Syfe Core can be a standalone all-in-one portfolio solution for investors, some of us may also prefer to use Syfe Core to form the bulk of our portfolios, while supplementing it with other investments or portfolios.
Source: Syfe
Syfe products are designed to work in tandem with each other. For example, you could use Syfe Core Balanced to form the bulk of your overall portfolio, take a smaller position in the stock market using Equity100, generate a stream of stable income using REIT+ and hold your emergency fund in Cash+.
In the end, every investor has different needs and preferences. Syfe considers these different preferences and makes it easy to mix and match the various investment strategies and portfolios so that you can also construct a portfolio that is suitable for you. You can also speak to Syfe’s wealth experts to find out how to best tailor a Syfe portfolio that is customised to your needs by scheduling a free consultation call here.
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