Newcomer SoFi debuts with US growth-tilted ETFs

Apr 11th, 2019 | By | Category: Equities

New ETF issuer SoFi has launched two ETFs in the US that provide smart beta exposure to US large- and mid-cap equities by tilting towards stocks with strong growth characteristics.

Newcomer SoFi debuts with US growth-tilted ETFs

The funds provide smart beta exposure by tilting towards stocks with strong growth characteristics.

The SoFi Select 500 ETF (SFY US) is linked to the Solactive SoFi US 500 Growth Index which is composed of the 500 largest publicly traded US companies.

Each stock is assigned a factor score that is determined through three key growth signals: top-line revenue growth and net income growth over the past 12 months, as well as 12-month forward-looking consensus estimates of net income growth.

Using market capitalization as a starting point, index provider Solactive adjusts constituent weights such that stocks with higher growth scores receive a larger weight, while those with lower scores have their weight reduced. Reconstitution and rebalancing occur annually.

The firm’s second launch is the SoFi Next 500 ETF (SFYX US) which tracks Solactive SoFi US Next 500 Growth Index.

The index uses the same weighting methodology as its large-cap sibling but focuses on the mid-cap equity segment by targeting the 501st through the 1000th largest companies listed in the US.

Listed on NYSE Arca, the funds come with expense ratios of 0.19% each; however, Sofi has agreed to contractually waiver the entire fee until at least July 2020.

“When it comes to achieving financial independence, investing isn’t a choice — it’s a requirement,” said SoFi CEO Anthony Noto. “We designed these ETFs to make it as simple and easy as possible for anyone to start investing for the future, without any fees dragging on your returns.”

Timo Pfeiffer, Head of Research at Solactive, added, “We are proud to find in SoFi another disruptive player that shares Solactive’s spirit and audacity to challenge the status quo. As foreseen in our blog last year, we have spotted the trend towards zero fees, which finally becomes a reality. SoFi’s advancement in technology-based investing and brokerage mirrors Solactive’s drive to utilize IT infrastructure to effectively add value for our clients. We are excited to be part of SoFi’s first steps into the ETF world.”

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