Note: Syfe has updated their promo code / referral code, the new code is: “FHWAIVER” and you will get SGD $30,000 managed FREE for 6 months. This works out to $75 saved in fees if you invest $30,000, so don’t forget to use it if you’re signing up!
For those who missed it, Syfe recently launched a new 100% equity portfolio, that uses factor based investing.
The Syfe REIT+ portfolio was very popular with investors, so I was quite excited to take a look at their new pure equity portfolio.
Syfe Equity100 Promo Code / Referral Code
For those who want to skip the review and go straight into opening an account, don’t forget to use the Promo Code below!
With Promo Code “FHWAIVER”:
New Syfe customers will have their first SGD $30,000 managed FREE for 6 months!
All funds invested anytime during the 6 months after a client’s first investment will not incur any management fees i.e. a new Syfe client makes a first deposit on 16 October 2020. This and all subsequent deposits made during the next 6 months will not be charged any management fee, up to a cap of $30,000. Full terms & conditions here.
Basics: What is Syfe Equity100?
According to Syfe:
Syfe’s Equity100 is an extension of our Global Automated Risk-managed Investment (“ARI”) product. The Global ARI product offers 11 Downside Risk portfolios rooted in MPT but our focus is on managing risk vis-a-vis targeting returns or asset allocations. We believe that returns are driven by systematic risks efficiently taken over the medium to longer term. Equity100 is essentially a carve-out of our existing Global risk-managed product but with ARI turned off.
To break that down simply, Syfe Equity100 is a pure equity portfolio. And within stocks, they do factor-based investing.
For those who are new to factor-based investing, this is the idea that you can separate stocks into different “flavours” (or factors). So you can split them into large cap v small cap, value vs growth etc. And within these factors, you can then choose to invest only in those that you think will do well.
Syfe’s Equity100 portfolio tilts towards growth, large-cap and low volatility. Which are factors that have done fantastically well over the past 10 years.
Rationale and thinking behind Syfe Equity100
According to Syfe, the reason why they came up with this Equity100 portfolio was because clients had feedback that their Syfe’s Global Automated Risk-Management Investments (basically an all-weather style portfolio with bonds and gold thrown in) was too conservative. Clients wanted something that was pure equity exposure.
So Equity100 is the result of that, which is a carve out of the equity portfolio of the Global ARI product, with the ARI component (automated risk management) turned off.
Because of this, the Syfe Equity100 is not tied to any targeted risk level nor risk-managed as such.
It simply tries to give you the best risk-adjusted return based on a portfolio that is 100% invested in equities.
So for investors that want a bit more risk, and who find traditional modern portfolio theory (MPT) based portfolios too safe (no pun intended) and boring, this is the portfolio to be looking at.
The asset allocation of the Syfe Equity100 is set out below.
The NASDAQ tracking QQQ comes in at a whopping 43% of the portfolio. S&P500 comes in at 14.6%, so you basically have about 60%+ exposure to the NASDAQ100 and the S&P500.
That’s quite a big allocation to the FAANG and tech stocks, as you can see on the sector allocation breakdown below.
10-year historical returns come in at a whopping 13.4%.
This makes sense, because if you start counting from 2010, and you buy growth, large-cap and low volatility stocks, there’s no doubt it’s going to do very well.
Past performance not an indicator of future returns – Returns going forward for Syfe Equity100?
Of course, nobody invests in a robo-advisor for historical returns.
The big question will be what are the returns over the next 5 to 10 years. Large cap, growth, low volatility factors had a fantastic 10 years. How do they perform going forward?
The simple answer of course, is that no one knows. Past returns are not an indicator of future performance.
Take Big Tech (FAANG) for example. They’ve had an amazing run the past 10 years, but going forward, regulatory issues and competition and margin pressures are going to come into play.
What does the next 10 years look like?
Now I genuinely don’t know the answer to this one. I do expect at some point that large cap, growth, and low volatility will no longer outperform. The problem though, is that it’s tough to say exactly when that will be.
Investors have been talking about reversion to the mean and value outperforming growth for a decade now, and value stocks just keep going lower, while growth stocks keep marching higher.
Sometimes in investing, you don’t want to fight the trend, and you want to just go along with it.
If that’s what you want, a portfolio that rides the trend from the past 10 years, Syfe Equity100 definitely delivers.
Does Syfe Equity100 switch factors over time?
I also asked Syfe if they would consider switching factors if they find that market conditions have changed.
For example, if they find that growth is underperforming, would they look to switch to value?
The answer is yes, they will, but it’s not a decision they would take lightly, because they don’t want to be too trigger happy and switch unless there is a clear change in trends.
Which makes sense in a way, because these kinds of long-term market trends don’t reverse overnight. They play out over a decade or more, and they reverse over many months.
So I do like this stance from Syfe Equity100, because if I’m investing in a large cap, growth, low volatility portfolio, I don’t want them to change it too easily as well.
If you’re interested, you can read more about their factor selection strategy here.
Syfe really shines in fees as well. Every dollar saved on fees is equivalent to an extra dollar earned in investing. More details on fees here.
For new Syfe users, use Promo Code “FINANCIALHORSE” to enjoy:
Syfe Wealth: Zero management fees for 3 months; Syfe Trade: Additional S$10 bonus on top of existing promotions when users make their first trade
My personal thoughts on Syfe Equity100
Would I invest in Syfe Equity100?
To be honest, I do quite like the portfolio.
We live in strange times, where we have the global economy going through the worst recession since the great depression, and yet stocks are close to all-time highs due to record stimulus and liquidity injections.
And sometimes in markets like that, the best investing strategy could really just be a trend following strategy. No need to overthink matters, just load up on FAANG stocks, tilt towards large cap, growth, and low volatility, and watch returns sky rocket.
In investing, it really doesn’t matter how you make money, all that matters is that you make money.
If what it takes is a trend following strategy, hey, that’s still good money right?
So yeah, I do think Syfe Equity100 is worth a look at.
How does Syfe Equity100 fit into a portfolio?
But because Syfe Equity100 is a 100% equities portfolio, you do need to understand you’re taking on much more risk than compared to a diversified portfolio with allocations to gold, bonds etc.
There’s just no denying that. If things take a turn for the worse, a portfolio like this could see big drawdowns. Of course, one way to do it is to pair the Equity100 with a more diversified portfolio like the Syfe Global ARI.
The beauty with the Syfe Equity100 though, is that it gives you that flexibility. You can decide how much money to put into the equities portfolio, and you decide on your asset allocation accordingly.
So if you want 60% of your net worth in equities, Syfe Equity100 allows you to do it. Likewise for 20%.
One big advantage with Syfe versus traditional DIY investing is that there’s no minimum investment amount associated with Syfe, and no brokerage fees here. To give an example – with DIY investing, if you want to put $500 into Portfolio A and $600 into Portfolio B, that may not make sense because transaction fees and brokerage fees as a percentage of the portfolio can get really big (eg. most brokerages have $10 minimum commissions for Singapore shares). With Syfe, you just pay the same percentage fee to Syfe, regardless of how small the investment amount is, so you don’t need to worry about this issue with transaction costs. So if you’re investing smaller amounts, robo advisors like Syfe we definitely an option worth looking at.
Syfe Promo Code / Referral Code
If you’re keen to check it out, you can explore the full portfolio. Don’t forget to use the Promo Code “FINANCIALHORSE” for readers of Financial Horse.
For new Syfe users, use code “FINANCIALHORSE” to enjoy Syfe Wealth: Zero management fees for 3 months; Syfe Trade: Additional S$10 bonus on top of existing promotions when users make their first trade
Financial Horse x Syfe Webinar
Sign up for the webinar here.
Disclaimer: This post is sponsored by Syfe, all opinions and views expressed in this article are courtesy of Financial Horse.