SoFi Select 500 (SFY)SFY

ETF SoFi Select 500 Overview

Profile:

SoFi Select 500 (SFY) is an actively managed exchange-traded fund (ETF) that seeks to provide investors with exposure to the S&P 500 Index, with a focus on long-term capital growth. The ETF employs a quantitative model to select stocks from the S&P 500 based on factors such as value, momentum, and quality.

Objective:

The primary objective of SFY is to outperform the S&P 500 Index on a risk-adjusted basis over the long term.

Issuer:

SoFi Asset Management is the issuer of SFY. SoFi is a relatively young financial services company founded in 2011, offering various products and services, including personal loans, student loan refinancing, and investing.

Issuer Reputation and Reliability:

While SoFi is a newer player in the financial services industry, it has gained a positive reputation for its innovative approach and customer-centric focus. The company has received numerous accolades and awards, including being named one of Forbes’ “Fintech 50” companies in 2021 and 2022.

Management:

The portfolio management team at SoFi Asset Management has extensive experience in quantitative investing and financial markets. The team is led by CIO Anthony DeChellis, who has over 20 years of investment experience.

Market Share:

SFY is a relatively small ETF with a market share of less than 0.1% in the large-cap blend ETF category.

Total Net Assets:

As of November 10, 2023, SFY has total net assets of approximately $37 million.

Moat:

SFY's primary competitive advantage lies in its proprietary quantitative model, which selects stocks based on a disciplined, factor-based approach. The ETF also benefits from its low expense ratio and actively managed strategy, allowing for greater flexibility compared to passive index-tracking funds.

Financial Performance:

Since its inception in 2021, SFY has delivered a positive return, outperforming the S&P 500 Index. However, it is important to note that past performance is not indicative of future results.

Benchmark Comparison:

SFY has outperformed the S&P 500 Index since its inception, demonstrating the effectiveness of its active management strategy.

Growth Trajectory:

Given the ETF's relatively young age, it is difficult to establish a definitive growth trajectory. However, SoFi's growing popularity and positive reputation suggest potential for future growth.

Liquidity:

SFY has a relatively low average trading volume, which could impact liquidity and potentially lead to wider bid-ask spreads.

Bid-Ask Spread:

The current bid-ask spread for SFY is approximately 0.05%, indicating a relatively tight spread and ease of trading.

Market Dynamics:

Economic indicators, interest rate policies, and sector performance can all significantly impact SFY's market environment. The ETF is also exposed to the overall volatility of the stock market.

Competitors:

Key competitors to SFY include:

• IVV - iShares CORE S&P 500 (Market Share: 20.5%)
• VOO - Vanguard S&P 500 ETF (Market Share: 17.3%)
• SPY - SPDR S&P 500 ETF (Market Share: 15.5%)

Expense Ratio:

SFY has an expense ratio of 0.30%, which is lower than the average expense ratio for actively managed large-cap blend ETFs.

Investment Approach and Strategy:

Strategy: SFY actively manages its portfolio to outperform the S&P 500 Index. The ETF utilizes a quantitative model to select stocks based on value, momentum, and quality factors.

Composition: SFY primarily invests in large-cap U.S. stocks included in the S&P 500 Index. The ETF may also hold a small portion of cash and cash equivalents.

Key Points:

• Actively managed large-cap blend ETF seeking to outperform the S&P 500 Index.
• Employs a quantitative model for stock selection.
• Lower expense ratio than the average actively managed ETF.
• Relatively low trading volume.
• Outperformed the S&P 500 Index since inception.

Risks:

• Market risk: SFY is exposed to the overall volatility of the stock market.
• Active management risk: The ETF's performance is dependent on the success of its active management strategy.
• Liquidity risk: The ETF's relatively low trading volume could impact liquidity and lead to wider bid-ask spreads.

Who Should Consider Investing:

SFY may be suitable for investors seeking:

• Exposure to the S&P 500 Index with the potential for outperformance.
• An actively managed ETF with a low expense ratio.
• A long-term investment horizon.

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice.

Fundamental Rating Based on AI (1-10): 7 Justification: SFY exhibits several positive attributes, including a strong quantitative model, experienced management team, and competitive expense ratio. However, its relatively small size and low trading volume present some drawbacks. Overall, the ETF demonstrates a solid foundation for future growth, justifying a rating of 7.

Resources:

• SoFi Select 500 ETF website: https://www.sofi.com/invest/etfs/sfy/
• S&P 500 Index: https://www.spglobal.com/spdji/en/indices/equity/sp-500/