Introducing SoFi ETFs in Automated Investing
[Updated 4/19/19 to include our full statement: Like any other investment advisor, we make changes regularly to the composition and allocation of our members’ portfolios in relation to their investment objectives and risk tolerance. SoFi Select 500 and SoFi Next 500 provide comparable access to market segments at far lower expense ratios than those of other funds, as we have waived all management and trading fees. We notified our members in a timely fashion in accordance with regulations, and will continue to address individual member questions.]
SoFi is always searching for innovative ways to help our members get their money right. After some hard work and planning, we are excited to announce the latest addition to our suite of Automated and Active Invest product portfolios—SoFi ETFs (exchange-traded funds).
We constructed these ETFs specifically with SoFi members in mind. They’re intelligently designed, diversified, and appropriate for both beginner investors and those who are well on their way to achieving their investment goals.
What Are They?
SoFi is launching two broadly diversified US stock ETFs designed to capture the vast majority of the US stock market:
1. SoFi Select 500 ETF (ticker SFY) targets the largest 500 US stocks
2. SoFi Next 500 ETF (ticker SFYX) invests in the “next” 500 largest US companies
We worked closely with an established index provider to create these funds with our members’ long-term interests in mind.
So What’s So Special About Them?
Well, a lot!
While most traditional indexes weight their holdings using only the size of the company (bigger companies receive proportionately larger weights), SoFi’s bespoke indexes go one step further.
We start by allocating the companies by size, and then we adjust those weights according to how high the companies rank across our proprietary growth score. The growth score uses a combination of three financial metrics for each company, including both historical performance and estimates of future financial performance.
Companies that rank above average according to their growth score receive a slightly higher weight in the index, and companies with a below average growth score receive a slightly lower weight.
The end result is a broadly diversified portfolio that, relative to traditional indexes, has increased exposure to companies that are growing the fastest – a characteristic that is particularly suited for long-term investing and appropriate for our members.
We’re Waiving Fees For The First Year
Keeping overall costs low for our members is a huge priority for SoFi, which is why we’re committed to waiving all management fees for these funds for at least one year1 (and keeping costs low forever!). This will result in reduced average fund expenses across all of our automated portfolios that include stocks.
Our most aggressive strategies that have 100% stock exposure will see their average fund expenses go from 0.06% to under 0.03%—a 50% reduction.
Since SoFi does not charge an overall management fee for automated portfolios, our Automated Investing portfolios will be among the lowest (if not the lowest) all-in-cost professionally managed investment options in the world. Full stop.
And, We’re Transparent About Them
If we ever decide to remove the fee waiver, we will announce it as soon as possible to make sure members have time to consider options.
How Will They be Used in SoFi’s Automated Investing Portfolios?
We designed the SoFi Select 500 ETF and the SoFi Next 500 ETF to be core holdings, built for long-term investing. Together, they represent diversified exposure to the largest 1,000 US companies, which include all of the country’s large and mid-cap companies. Since exposure to small-cap stocks is also important, you’ll also see a new low-cost ETF dedicated to US small-cap stocks.
These three ETFs taken together represent nearly all of the publicly-traded companies in the US and will be used to represent US stock exposure in the Automated Investing portfolios. Since we’ll have dedicated exposure to large, mid, and small companies, this will also allow us to more finely tune our allocations and respond to changing market conditions.
Are There any Other Adjustments to the Automated Investing Portfolios This Quarter?
As always, SoFi monitors market events and makes adjustments to our portfolios as the global economy evolves and investment fundamentals react to those developments. As we look toward the year ahead, our confidence in the global economy is growing less rosy.
While the US economy is chugging along full steam ahead, growth concerns are starting to surface in other parts of the world—notably Europe and China. Given the increased risks overseas, we are adjusting our stock exposure in portfolios to more heavily favor US companies.
These adjustments won’t require any action on your part, but if you’d like to discuss the changes in more detail or check in on your progress toward your goals, please contact one of our advisors. You can also email us at [email protected] for additional questions. For more information on SoFi ETFs, please visit here.
The information provided is not meant to provide investment, tax or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory and automated services offered through SoFi Wealth LLC. An SEC registered investment advisor. SoFi Securities LLC, member FINRA / SIPC .
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 Funds are new and have a limited operating history. The funds are passively managed and attempt to mirror the composition and performance of The Solactive SoFi US 500 Growth Index2 and The Solactive SoFi US Next 500 Growth Index3. The Fund’s returns may not match due to expenses incurred by the Funds or lack of precise correlation with the index. It is not possible to invest directly in an index. You can lose money on your investment in the Fund. Diversification does not ensure profit or protect against loss in declining markets.
SoFi ETFs are distributed by Foreside Fund Services, LLC.
1Investors 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. The Fund’s investment adviser has agreed to waive its Management Fees for the Funds until at least June 30, 2020.
2The fund is passively managed and attempts to mirror the composition and performance of The Solactive SoFi US 500 Growth Index. This index tracks the performance of 500 of the largest
U.S.-listed companies weighted based on a proprietary mix of their market capitalization and fundamental factors. It is not possible to invest directly in an index.
3The fund is passively managed and attempts to mirror the composition and performance of The Solactive SoFi US Next 500 Growth Index. This index tracks the performance of the 500 smallest of the 1,000 largest U.S.-listed companies weighted based on a proprietary mix of their market capitalization and fundamental factors. It is not possible to invest directly in an index.