First came SoFi’s fee-waived* ETFs, SoFi Select 500 ETF (ticker: SFY) and SoFi Next 500 ETF (ticker: SFYX), providing our members access to diversified US equity for only $10 per share.
Then came the SoFi Gig Economy ETF (ticker: GIGE), a first-of-its-kind thematic ETF focused on the companies revolutionizing how individuals live and work. SoFi is now excited to highlight the fourth ETF in our line-up: the SoFi 50 ETF (ticker: SFYF).
What is it?
The SoFi 50 ETF is an index fund that invests in 50 US stocks and seeks to track the Solactive SoFi US 50 Growth Index, which is an index that was jointly developed by SoFi and Solactive to provide investors with dedicated growth exposure. It follows a “smart beta ” strategy.
While traditional index funds weight companies based only on the size of the company, smart beta strategies use other metrics to weight holdings more intelligently.
The SoFi 50 ETF uses a custom blend of three financial metrics that focus on how fast a company is growing.
• The first is top-line revenue growth, which can be loosely defined as ‘sales’. How many goods or how many services is this company selling?
• The second is net income growth, which is essentially ‘profit’. Sales are important, but so is actually making money.
• Third is forward-looking consensus estimates of net income growth, which is an average of what analysts on ‘Wall Street’ think profits might be in the future.
By looking at all three metrics, SoFi combines both historic and future expected growth signals. This helps ensure a balance between how companies have performed in the past with how they’re expected to perform in the future.
Out of the largest 1,000 companies in the US, SoFi 50 (SFYF) invests in the top 50 companies that SoFi believes are growing the fastest, allocating 2% of the fund to each company to give members diversified exposure.
Why Might I Want to Invest in the SoFi 50 ETF?
Smart Beta Exposure:
Most traditional indexes allocate the most money to the largest company, but the SoFi 50 ETF selects companies based on how quickly they’re growing.
Investing equally in 50 high-growth companies across all industries reduces the risk that any one company or sector will have an outsized effect on performance.
The SoFi 50 ETF reconstitutes its portfolio twice a year, so the fastest growing companies are always in the mix. The fastest growing sectors in the economy will likely be overly represented relative to traditional broad-based funds.
Enhanced Risk-Return Profile:
SFYF has a higher risk-return profile than core, broadly-diversified ETFs, which may be suitable for long-term investors who are both beginning their investment journeys and those who are well on their way. For investors wanting targeted growth potential, SFYF could fit the bill.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus. A prospectus may be obtained by visiting www.sofi.com/invest/etfs/. Please read the prospectus carefully before you invest.
There is no guarantee that the Fund’s investment strategy will be successful. Investments in REITs involve unique risks. Securities in the real estate sector are subject to the risk that the value of their underlying real estate may go down. Shares may trade at a premium or discount to their NAV in the secondary market, and a Fund’s holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses. The Fund is new and has a limited operating history. The Fund is passively managed and attempts to mirror the composition and performance of The Solactive SoFi US 50 Growth Index. The Fund’s returns may not match due to expenses incurred by the Fund or lack of precise correlation with the index. You can lose money on your investment in the Fund.
Diversification does not ensure profit or protect against loss in declining markets.
*The Fund’s investment adviser has agreed to waive its Management Fees for SFY and SFYX until at least June 30, 2020. Investors buy and sell ETF shares through a brokerage account or an investment adviser like ordinary stocks; brokerage commissions and/or transaction costs or service fees may apply. Please consult your broker or financial advisor for their fee schedule.
SoFi ETFs are distributed by Foreside Fund Services, LLC.