SoFi repurposes ETF so investors can follow their friends

Jul 2nd, 2020 | By | Category: Equities

Online personal finance and investment company SoFi has changed the index underlying the SoFi 50 ETF (SFYF US) which will now reflect the most popular US large-cap equities held by SoFi members.

SoFi revamps ETF so investors can ‘follow their friends’

The new index allows investors to follow the most widely held US large-cap securities held by SoFi members.

The fund, which was launched in May 2019, initially tracked the Solactive SoFi US 50 Growth Index but has now switched to the SoFi Social 50 Index.

The original index captured the performance of 50 of the 1,000 largest US-listed companies that had the highest growth scores based on equally weighted measures of top-line revenue growth, net income growth, and forward-looking consensus estimates of net income growth.

The new index will also consist of 50 US large-cap stocks; however, chosen constituents will represent the 50 most widely held securities in SoFi members’ self-directed brokerage accounts.

The index is weighted by aggregate holdings within SoFi member accounts and will be rebalanced on a monthly basis.

SoFi CEO Anthony Noto, commented, “Our members have consistently expressed interest in investing in the same stocks as their friends and peers. We’ve been evaluating the SoFi Social 50 Index since October and it has outperformed the S&P 500 by over 20% since then. We are excited to introduce an ETF product that centers on the social elements of investing.”

The decision to repurpose the ETF, rather than launch a new fund, was likely influenced by the original strategy failing to garner any significant investor interest.

The updated fund remains listed on NYSE Arca and retains its ticker and expense ratio of 0.29%.

SoFi made its ETF debut in April 2019 with the launch of two funds – the SoFi Select 500 ETF (SFY US) and SoFi Next 500 ETF (SFYX US) – which provide smart beta exposure to US large- and mid-cap equities by tilting towards stocks with strong growth characteristics.

The funds became the first ETFs to be introduced with expense ratios that were effectively zero after SoFi agreed to waiver the funds’ management costs for one year. SoFi recently announced that the fee waivers applicable to these ETFs will be extended for another year. Collectively, the funds have accumulated $100 million in assets under management.

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