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Syfe Equity 100 vs Global ARI – Which Should You Choose?

Syfe Equity 100 vs Global ARI

Last updated on June 6th, 2021

When you’ve decided to create a portfolio with Syfe, you may notice that there are quite a few options!

Syfe Portfolio Selection Equity 100 vs Global ARI

So how does Syfe’s Equity 100 portfolio compare with the Global ARI?

The difference between Syfe Equity 100 and Global ARI

Syfe Equity 100 invests in ETFs that are 100% concentrated in equities. Meanwhile, Global ARI invests in ETFs from 3 different asset classes: equities, bonds and commodities. This makes the Global ARI more diversified compared to Equity 100.

Here is a head-to-head comparison of these 2 portfolios:

Investing Strategy

Both of Syfe’s portfolios use different strategies to invest your funds:

Syfe Equity 100 uses a Smart Beta strategy

Syfe’s Equity 100 focuses on building a smart beta portfolio for you. This is sometimes referred to as factor-based investing.

Syfe aims to provide high returns by concentrating on a few factors. These factors are chosen to ensure that your portfolio will outperform a certain index. Currently, Syfe has selected these 3 factors:

  1. Growth
  2. Large-cap
  3. Low-volatility

Syfe will then select the best ETFs that are weighted towards these factors.

For example, the current portfolio is heavily weighted in the QQQ ETF. This will help to tilt the portfolio towards the growth and large cap factors. Meanwhile, the low-volatility factor is achieved by investing in multiple sector ETFs.

This is different from the original Fama-French 3-factor model, which focused on:

  1. Size of firms
  2. Book-to-market values
  3. Excess return on the market

Syfe will dynamically select the best factors for you

In the long run, the factors that give the best returns in the future may no longer be these 3 factors. As such, Syfe has a dynamic factor selection to choose the best factors in the current economic climate.

Your portfolio will be over or under-weighted in certain factors to produce the highest risk-adjusted returns.

This helps to ensure that your portfolio will perform in any market condition!

Syfe’s Global ARI uses their ARI algorithm

You are able to use Syfe’s Automated Risk-managed Investment (ARI) strategy in your Global ARI portfolio.

This strategy is a combination of 2 different approaches:

  1. Global Portfolio Optimisation
  2. Risk Parity Portfolio

The aim of this strategy is to manage your risks, rather than focus on investment returns. This is because the economic conditions we experience are constantly changing.

As such, Syfe wants to use a risk-based approach to determine your asset allocation.

The funds that you invest with the Global ARI portfolio are allocated into 3 different asset classes:

  1. Equities
  2. Bonds
  3. Gold

Here is how Syfe’s ARI strategy fared against the other 2 portfolios.

Syfe ARI Performance

Syfe’s ARI algorithm allocates your assets based on your downside risk

Syfe uses ‘Downside Risk’ to measure the amount of risk that you’re willing to take.

In 39 out of every 40 years, a Syfe portfolio in a 15% Downside Risk category (at 95% MTL) will not lose more than 15% in a given year.

Syfe

The Downside Risk ranges from 5%-25%.

Based on the Downside Risk that you choose, Syfe will allocate your assets into the 3 different asset classes.

If you choose the highest risk profile (25%), your funds will be heavily weighted in equities.

Syfe Global ARI 25 Downside Risk

Meanwhile, the lowest risk profile (5%) will be heavily weighted in bonds.

Syfe Global ARI 5 Downside Risk

There are 11 different portfolios you can choose from, based on the Downside Risk you’re willing to take.

As such, you’ll need to decide on the Downside Risk that best suits your risk profile!

Type of Assets

Both of these portfolios invest in different types of assets.

Equity 100 invests in 100% equities

In your Equity 100 portfolio, you will invest in a portfolio of equity ETFs. Here are the 12 equity ETFs that Syfe currently invests in:

ETFETF Name
QQQInvesco QQQ Trust Series 1
CSPXiShares Core S&P 500 UCITS ETF USD (Acc)
EFAiShares MSCI EAFE ETF
XLPConsumer Staples Select Sector SPDR Fund
XLVHealth Care Select Sector SPDR Fund
XLUUtilities Select Sector SPDR Fund
IEMGiShares Core MSCI Emerging Markets ETF
XLKTechnology Select Sector SPDR Fund
XLYConsumer Discretionary Select Sector SPDR Fund
XLBMaterials Select Sector SPDR Fund
IJHiShares Core S&P Mid-Cap ETF
IJRiShares Core S&P Small-Cap ETF

Equity 100 invests in a variety of equity ETFs. Moreover, they are diversified across a wide range of sectors and countries.

Most of these ETFs are listed on the NYSE. The only exception is the CSPX ETF which is an Irish-domiciled S&P 500 ETF.

The Global ARI portfolio invests in equities, bonds and commodities

In the case of the Global ARI portfolio, your funds will be invested in 3 different asset classes:

  1. Equities
  2. Bonds
  3. Commodities

Here are the 19 ETFs that Syfe invests in your funds with the Global ARI portfolio:

ETFETF NameAsset Class
TLTiShares 20 Plus Year Treasury Bond ETFBond
SPYSPDR S&P 500 ETF TrustEquity
XLPConsumer Staples Select Sector SPDR FundEquity
IEFiShares 7-10 Year Treasury Bond ETFBond
GLDSPDR Gold TrustCommodity
EFAiShares MSCI EAFE ETFEquity
XLVHealth Care Select Sector SPDR FundEquity
RSPInvesco S&P 500 Equal Weight ETFEquity
XLKTechnology Select Sector SPDR FundEquity
XLUUtilities Select Sector SPDR FundEquity
XLYConsumer Discretionary Select Sector SPDR FundEquity
XLBMaterials Select Sector SPDR FundEquity
XLIIndustrial Select Sector SPDR FundEquity
XLFFinancial Select Sector SPDR FundEquity
AGGiShares Core US Aggregate Bond ETFBond
XLEEnergy Select Sector SPDR FundEquity
IEMGiShares Core MSCI Emerging Markets ETFEquity
IJHiShares Core S&P Mid-Cap ETFEquity
BNDXVanguard Total International Bond Index Fund ETFBond

The % composition of each ETF depends on the Downside Risk you’ve chosen.

All of these ETFs are listed on the NYSE. Interestingly, Global ARI invests in the SPY S&P 500 ETF, while Equity 100 invests in CSPX.

There are ETFs that are found in both Equity 100 and Global ARI

You may have noticed that there are some ETFs that are found in both the Equity 100 and Global ARI portfolios!

ETFEquity 100Global ARI
QQQ
CSPX
EFA
XLP
XLV
XLU
IEMG
XLK
XLY
XLB
IJH
IJR
BNDX
TLT
IEF
AGG
GLD
RSP
XLI
XLF
XLE
SPY

There are 9 ETFs that overlap between these 2 portfolios. As such, you may want to choose one portfolio, instead of investing in both portfolios.

This is similar to how the ARKK ETF has overlaps with the other ARK ETFs (ARKQ, ARKW, ARKG and ARKF).

Fractional shares

Syfe manages your assets by co-mingling them with the assets of their other customers. This means that all assets are held in a single custodian account.

As such, you will be able to invest in fractional shares for both portfolios.

Syfe Fractional Shares

When you are able to invest in fractional shares, you are able to fully invest your funds. You do not need to worry about the price of each ETF!

However, there comes a risk if Syfe closes down like Smartly did in early 2020. Since your assets are co-mingled, you may not be able to sell off your fractional shares.

As such, you do not have full control over the fate of your assets!

Syfe has received substantial funding

However, you may not need to worry so much about Syfe closing down. Syfe managed to secure USD$18.6 million in their Series A funding.

They received SGD$5.2 million in their seed funding too.

Syfe Crunchbase 3

This alone doesn’t mean that Syfe is truly profitable. However, it is a good indicator that investors are confident in this company.

As such, this should give you some confidence that Syfe is here to stay!

Performance

It is hard to compare the performances between these 2 portfolios since they are rather different.

Both have a different asset allocation, so the allocation may have a part to play in how much returns you’ll receive.

Moreover, the past returns can never be a good indicator of future returns. One portfolio that performs well now may not do so in the future.

Rather than looking at performance, you should be considering the investment strategy that is being used instead!

Minimum Sum

Both portfolios do not require you to have a minimum sum to start investing. This makes the portfolios very accessible even if you have a small sum!

You are able to invest with even $1 as Syfe invests in fractional shares.

Fees

Here are the fees that you’ll need to pay when you invest in either portfolio.

Both portfolios have the same pricing structure under Syfe

Both portfolios are managed by Syfe. As such, they will have the same management fees being charged:

Total Amount InvestedManagement Fee
< $20k0.65%
≥ $20k and < $100k0.50%
≥ $100k0.40%

The management fees are pretty reasonable for a robo-advisor. It is slightly lower compared to StashAway’s fee of 0.8% for the first $25k invested with them.

You can read my comparison between Syfe Equity 100 and StashAway’s 36% portfolio to see which one is more suitable for you.

You will need to pay an expense ratio for the ETFs in both portfolios

On top of the management fees, you will need to pay for the expense ratios of the ETFs in both portfolios.

ETFExpense Ratio
QQQ0.20%
CSPX0.07%
EFA0.32%
XLP0.13%
XLV0.13%
XLU0.13%
IEMG0.13%
XLK0.13%
XLY0.08%
XLB0.13%
IJH0.05%
IJR0.06%
BNDX0.08%
TLT0.15%
IEF0.15%
AGG0.04%
GLD0.25%
RSP0.20%
XLI0.13%
XLF0.12%
XLE0.10%
SPY0.095%

The expense ratios range from 0.05% to 0.32%.

As such, the total fees you incur with Syfe should be less than 1%.

You will incur withholding taxes with both portfolios

Equity 100 and Global ARI invest in ETFs that are domiciled in the US. The only exception is CSPX (Equity 100), which is Irish domiciled.

As such, you will incur a dividend withholding tax from these ETFs.

Here are the amount of taxes you will incur:

CSPXAll other US ETFs
Dividend Withholding Tax30%15%

The dividends that you receive will be after these deductions have been made.

Syfe Dividend Distribution

You may be subject to estate tax with both portfolios

Both portfolios mainly invests in US-domiciled ETFs. As such, you may be subject to an estate tax when you pass on.

An estate tax is a tax on the right to transfer your estate to someone else.

The only exception is CSPX, which is an Irish-domiciled ETF. Ireland does not have an estate tax, unless:

  1. You or the beneficiary are Irish citizens
  2. You own property in Ireland

Syfe claims that you should not be subject to any estate tax. This is because your assets are held in a co-mingled account. Since you are not investing as an individual, you should not be subject to this tax.

However, they have added a disclaimer, which shows that they are unable to give a definite answer!

You’ll need to convert your SGD to USD

Both portfolios invest in ETFs which are denominated in USD. As such, you will incur another cost which is the currency conversion fee.

This occurs when you convert your SGD to USD to invest in these ETFs.

When you decide to withdraw your funds from Equity 100, the exchange rate may slightly affect your returns.

Verdict

Here’s a breakdown of these 2 portfolios:

Equity 100Global ARI
Investing StrategySmart BetaARI
AssetsEquitiesEquities
Bonds
Commodities
Fractional SharesYesYes
Minimum Sum NoneNone
Dividend Withholding Tax15% for CSPX
30% for rest
30%
Estate TaxMaybeMaybe
FeesManagement fee
Expense ratio
Currency exchange risk
Management fee
Expense ratio
Currency exchange risk

So which portfolio should you choose?

Choose Global ARI if you prefer a balanced portfolio

Syfe’s Global ARI portfolio diversifies your funds across different asset classes.

Your portfolio may be rebalanced to ensure that you’re exposed to the same Downside Risk!

The Global ARI portfolio is similar to StashAway’s General Investing portfolio. Both of them believe that asset allocation is the most important.

If you prefer to have a diversified portfolio, Global ARI is more suitable for you.

Choose Equity 100 if you have a long time horizon

Syfe’s Equity 100 portfolio is extremely aggressive portfolio that invests entirely in equities. You will be guaranteed to earn a higher return on your investment.

However, you will need to stay invested for the long term (at least 5 years).

Stocks are extremely volatile, and they can go up and down very quickly. If you invest at the wrong time, the value of your stocks may plummet in the short run.

If you continue to stay invested in the market, the value of your stocks will go up. However, this will only occur in the long run!

You will need to have the willpower and not check your stocks everyday. This will reduce the chances of you making emotional decisions and selling your stocks at a loss!

If you can’t bear to see your portfolio’s value fluctuating a lot, Global ARI will be better suited for you.

Conclusion

Both portfolios offer unique ways to invest your money. The portfolio that you should choose depends on:

  1. Your time horizon
  2. The investment strategy that you agree with
  3. The type of asset allocation you wish to have

👉🏻 Referral Deals

If you are interested in signing up for any of the products mentioned above, you can check them out below!

Syfe Referral (Up to $30,000 SGD managed for free for 3 months)

If you are interested in signing up for Syfe, you can use the referral code ‘FIPHARMwhen you are creating your account. You will have your first $30,000 invested with Syfe managed for free for your first 6 months.

You will be able to save up to $75 worth of fees!

Syfe Referral

You can view more information about this referral program on Syfe’s website.


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