A Guide to SoFi’s Gig Economy ETF
How many people do you know who make a few extra bucks driving for Uber or delivering for Postmates… or who cobble together their whole income based on these freelance, make-your-own-hours “gigs?”
Even if your answer is zero, it’s undeniable that the gig economy—the one supported by a fleet of independent contractors, largely conducting their business from smartphones—has transformed the idea of American work. And in fact, much evidence suggests it’s just getting started.
Nearly half (47%) of the adult workforce in the U.S. is either currently working, or has worked in the past, as an independent contractor. And projections from the Freelancing in America study by Upwork and the Freelancers Union suggest that most of us will be freelancing by 2027.
Although not every freelancer relies on the gig economy to earn secondary (and sometimes primary) income, millions do—literally.
Which is why Social Finance Inc.’s gig-focused addition to the world of investing is so exciting: a gig-economy-based ETF, available and trackable on the market as GIGE.
Why Might You Decide to Invest in the Gig Economy?
Despite its inarguable (and growing) importance in American culture, some investors might still be skeptical about investing in the gig economy as an industry. After all, it’s dominated by tech-based startups that sometimes soar, but often flop before they’re even a blip on the radar screen.
But while startups may be volatile, they also see some of the highest growth potential on the market. Even Amazon was a startup once–as well as companies that have become household names like PayPal and Twitter.
Even if you leave aside these OG names in the world of digital innovation, it’s clear that there’s earning potential and investor interest in this sector. However, one should always consider the risks before investing.
For instance, Grubhub’s revenue for the quarter ending on March 31, 2020 was a 12% increase year-over-year. (Of course, it’s also important to remember that this brand-new sector is a constantly-changing landscape; the precipitous falls of both Uber and Lyft after their 2019 IPOs loom large as examples.)
The popularity of the gig economy and its potential for investors is why SoFi saw the need to build an ETF specifically around this unique and increasingly influential industry. As the “gig-e” continues to evolve and grow, investors can attempt to reap a portion of its prosperity with minimal effort.
What You Need to Know About GIGE
What makes SoFi’s GIGE ETF a potentially compelling addition to your portfolio?
Aside from the undeniable impact of the gig economy on the American workforce (and thus American economics) as a whole, there are a few other reasons. Here’s how it works.
Active Management
Unlike many ETFs, this fund is actively managed by Toroso Investments—a must, given the lightning-quick changes in this technology-based industry, where the next big thing can happen literally overnight.
With hands-on changes being made to keep up with market trends and conditions, GIGE seeks to maximize investor returns, and is built for flexibility: The fund is structured so that most companies that fit its criteria upon IPO can be included in the portfolio after a single month of trading, as opposed to traditional, passive funds that usually wait two to three months to include a new asset.
Broad-Ranging Asset Inclusion
The GIGE ETF curates a portfolio of assets based on a broad definition of the gig economy, including not only domestic players, but also those abroad: nearly 30% of GIGE’s holdings are based outside of the U.S., and small-, mid-, and large-cap securities are all included.
In other words, it’s more than a fund full of Ubers. GIGE’s portfolio includes companies across four different categories, ranging from platform businesses (the ones you probably think of when you first think of the words “gig economy,” like Shipt, as well as commissions-based platforms like Etsy) to ancillary, transactions-based, and marketing businesses that lie adjacent to the gig economy.
First of Its Kind
Investors have been interested in the gig economy since its inception. But you don’t have to have venture capital levels of cash to get involved in this sector—and you don’t have to spend tens of hours researching every up-and-coming gig economy company, either. GIGE is one of the first ETFs to seek long-term capital appreciation concentrating specifically on the gig economy—a sector that, per 2018 tablations, has added an annual $1.4 trillion to the American economy.
SoFi’s GIGE ETF offers investors easy access to this sector at a relatively low share price, giving you the opportunity to jump onboard while the gig economy is still relatively close to its infancy. That said, as with any ETF or stock market asset, risks are involved; there’s no such thing as a sure investment!
ETFs: How Do They Work, Again?
Think all this sounds pretty attractive, but need a quick refresher course on ETFs? No worries, we’ve got you covered.
An ETF, or exchange-traded fund, is a type of tradable stock market asset that is, itself, comprised of multiple assets. In other words, it’s a collection of securities like stocks, bonds, and commodities that allow you to add instant diversification to your portfolio without having to do a lot of market research and trading on your own.
Along with giving you the chance to buy a wide range of assets with a single purchase, ETFs can also help you save money on broker commissions, which can add up when you’re buying stocks one by one, and are also generally offered at a better expense ratio than mutual funds—which are similar to ETFs, but feature active management that may make them costlier.
With SoFi’s GIGE ETF, however, you get an actively-managed ETF that you can still buy and trade at will, and which still comes at an attractive per-share price. If you’re interested in adding the gig economy’s one-of-a-kind growth capacity to your portfolio, GIGE may well be a smart and easy way to do so.
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.
As of 5/31/20 the top 10 holdings of the SoFi Gig Economy ETF are as follows: Etsy 2.4%, Pinduoduo 3.4%, PayPal 3.1%, Twitter 2.7%, Square 3.2%, Fiverr 3.8%, Pinterest 1.9%, Uber 2.9%, Upwork 3.4%, and Alibaba 2.6%.
There is no guarantee that the Fund’s investment strategy will be successful. 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. You can lose money on your investment in the Fund. Diversification does not ensure profit or protect against loss in declining markets. Investments in foreign securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Because the Fund may invest in a single sector, country or industry, its shares do not represent a complete investment program. As a non-diversified fund, the value of the shares may fluctuate more than shares invested in a broader range of industries and companies because of concentration in a specific sector, country or industry.
Since the Fund is actively managed it does not seek to replicate the performance of a specified index. The Fund may frequently trade all or a significant portion of its portfolio; and have higher portfolio turnover than funds that do seek to replicate the performance of an index.[MT[1]
SoFi ETFs are distributed by Foreside Fund Services, LLC.
* 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.
This is not an offer, or solicitation of any offer to buy or sell any security, investment or other product.
INVESTMENTS ARE NOT FDIC INSURED, HAVE NO GUARANTEE, AND MAY LOSE VALUE. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Past performance, historical returns, future projections, and statistical forecasts are no guarantee of future returns or future performance. The firm reserves the right to monitor and retain all incoming and outgoing communications as permitted by applicable law.
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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC .
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