Disclaimer: This is not a sponsored post, but this article contains referral codes that allow me to earn referral rewards at no cost to you if you choose to signup with my codes, which helps me maintain the blog.
Syfe, a robo-advisor, recently released a new type of portfolio that investors can choose called Syfe Select.
Since then, I’ve received several questions regarding what I think about it and seen numerous discussions about it online.
Today, I’ll be sharing my opinion about Syfe Select and whether or not it is something that I’ll personally use.
What Is Syfe Select?
Conventionally, robo-advisors like Syfe offer a range of fixed portfolios for investors to choose from.
Investors would then be able to invest in the entire portfolio even with a small amount of capital but would not be allowed to make changes to the portfolio.
That is, they cannot choose what goes into the portfolio or how the portfolio is allocated to various investments.
Syfe Select consists of 2 types of portfolios – thematic and custom.
The former allows investors to choose from a range of niche-themed portfolios like Environmental, Social and Corporate Governance (ESG) or disruptive technology.
These portfolios work the same way as traditional portfolios, so there’s nothing too much to get excited about here.
The latter, however, is where it gets interesting.
As its name suggests, custom portfolios allow investors to customise portfolios of their choice where they get to call the shots.
From the range of available ETFs, investors will be able to choose up to 8 ETFs that they want to include in their custom portfolio.
They also get to decide how much weight each ETF should have in the entire portfolio, ie the allocation %.
Once these are decided, all funds that are allocated to this portfolio will be invested accordingly.
If you’re curious about the range of ETFs that can be chosen, I’d say it’s a fairly wide range.
Popular index ETFs like CSPX (S&P 500) and ACWI (world).
Different market sectors like EEM (emerging markets) and VBK (small-cap growth).
Thematic ETFs like ARKK (disruptive innovation) and US technology (QQQ).
Country-specific ETFs like EWT (Taiwan) and EWY (South Korea).
And even different asset classes like BND (bonds), GLD (gold), and VNQ (real estate).
Syfe Select’s custom portfolios provide a way for existing Syfe investors to experience do-it-yourself (DIY) investing within the comfort and familiarity of Syfe’s platform.
The pricing for Syfe Select is the same as all other Syfe investment portfolios, which can be seen in the table below.
|Annual Management Fee
|S$20k – S$100k
|S$100k – S$500k
The only fee that Syfe charges upfront is the annual management fee.
There are no commission fees, rebalancing fees, entry/exit fees, or withdrawal fees.
And while there isn’t any foreign currency (FX) conversion fee, you pay for that in the form of Syfe’s FX spread, ie the rate they offer you vs the market rate.
Syfe actually has a very competitive FX spread of 0.09%, which is significantly lower than the likes of Tiger Brokers/retail banks.
It’s not quite the spot-rate that Interactive Brokers (IBKR) offers, but on small amounts, this FX spread will cost you less than IBKR’s 2 USD FX fee.
Other fees like ETF expense ratios and exchange clearing fees are also applicable, but these cannot be avoided regardless of which broker or robo-advisor you invest with.
You can read more about all these fees here.
It should be noted that the pricing above is not charged specifically for Syfe Select portfolios alone, but rather for all portfolios within Syfe.
So if you invest in Syfe’s fixed portfolios, your fees will be dependent on the total investment sum across all portfolios.
Why Syfe Select?
There are several benefits to using Syfe Select.
Affordable & Convenient
For one, it’s affordable and convenient for beginners, especially those who have little funds to start investing with.
With no commission fees, investors can invest in multiple ETFs at no upfront cost.
If they were to do the same with DIY investing, they would be charged a commission fee for each ETF they invest in since individual trades would have to be placed.
Having a fixed % allocation to each ETF within the portfolio also removes the hassle of deciding how much to allocate to each ETF whenever fresh funds are added to the portfolio.
With DIY investing, this is something that investors need to consider, which also often have other restrictions surrounding lot size.
Going off on the topic of lot size, most brokers require investors to invest in terms of lot size rather than fund size.
So if you have $1000 to invest and 1 share of an ETF costs $300, you can only buy 3 shares of the ETF with the remaining $100 uninvested.
And if the minimum lot size costs more than what you can afford to invest, you won’t be able to invest at all.
IBKR is one of the only brokers that I know of that supports fractional shares, but even then, it’s only the case for US-listed investments.
Syfe supports fractional shares for all of their ETFs such as CSPX, so you can be sure that any money you can afford to invest will be invested.
Wide Range of ETFs
As mentioned earlier, Syfe Select offers a pretty generous selection of ETFs that investors can choose from to customise their portfolios.
This variety enables investors to create highly diverse portfolios and should cater to the needs of most investors.
Experience DIY Investing
Many people who decide to invest with robo-advisors such as Syfe do so because DIY investing seems scary.
And it definitely can be, especially if they’re new to and unfamiliar with investing.
Syfe Select’s custom portfolios allow investors to experience what DIY investing can be like by picking their own investments rather than being limited to a fixed portfolio.
This can help them feel more comfortable with trying out DIY investing and explore the option of eventually shifting away from robo-advisors to be DIY investors.
Finally, having explored Syfe’s user interface (UI), I think that it’s quite beginner-friendly in that it’s intuitive to navigate.
It’s fairly easy to find things and the steps are clear.
Also, in the few times that I used their live chat function to make enquiries, the live agent responded to me within seconds – which is pretty impressive, in my opinion.
So even if you encounter any issues, you should be able to quickly get help from Syfe.
Why Not Syfe Select?
Not Fully Customisable
Even though there is a wide range of ETFs available on Syfe Select, they don’t carry as many ETFs as online brokers do.
As a result, there are many ETFs that are unavailable on Syfe and if the specific ETFs you want to invest in happen to be one of them, you’ll have to look for alternatives.
If there aren’t any good alternatives available, then you may need to rethink your portfolio.
While this may not be a big deal, it’s undeniably a lack of complete control over your custom portfolio which you’d have with DIY investing.
Management Fees Snowball Quickly
Even though Syfe only charges a management fee and no other fees, this fee alone can quickly snowball into a large sum.
If you have $10k invested, you’ll be charged an annual fee of $65, or $5.41/month.
This is still pretty cheap, but when your portfolio sum grows, the total fees charged increase quickly.
When compared to DIY investing, it’s often the other way round.
Investment fees are more expensive when the amount invested is small but decreases in terms of % when the amount invested grows.
Would I Use Syfe Select?
Syfe Select is a pleasant surprise to me and honestly, I don’t think there are any major flaws about it.
One of the things that stands out the most is the ability to invest in fractional shares for the ETFs in the custom portfolio.
Some of these ETFs, like CSPX, are not supported in fractional shares via online brokers, so this is one of, if not the only way to do so.
However, Syfe Select is something I would not use today.
The main reason behind this is the management fee.
As explained earlier, this fee racks up quickly and the more you invest, you more you end up paying in fees.
This is something that I can’t get behind because the whole point of investing is to grow your wealth.
Yet, as you do so, the amount you pay in fees also grows.
Personally, I’m already comfortable enough as a DIY investor to invest via online brokers.
And if I were to compare the fees incurred from DIY investing with IBKR and Syfe, it turns out that Syfe isn’t all that cheap.
It will be assumed that monthly investments are made to invest in CSPX.
The commission fee for USD-denominated securities on the LSE is 1.70 USD.
IBKR also charges an FX fee of 2 USD.
Annual Commission Fee = 1.70 * 12 = 20.40 USD
Annual FX Fee = 2 * 12 = 24 USD
Assuming an exchange rate of 1 USD = 1.35 SGD,
Total Annual Fee = (20.40 + 12) * 1.35 = 59.94 SGD
Assuming an average annual investment sum of S$10k,
Annual Management Fee = 10000 * 0.65% = 65 SGD > 59.94 SGD
One may argue that Syfe Select’s custom portfolios allow up to 8 ETFs to be held in a single portfolio, so a similar comparison should be done for DIY investing when it comes to fees.
True enough, Syfe Select (and robo-advisors in general) poses a more cost-efficient way to invest in multiple ETFs consistently every month.
With DIY investing, increasing the number of trades made would result in higher fees.
So the best way to minimise fees would be to alternate between the various ETFs one would want to invest in for each investment.
For example, invest in ETF 1 for the 1st month, then ETF 2 for the 2nd month, and so on.
This isn’t ideal, but I think it’s worth it to save on fees.
If investing consistently into multiple ETFs is important to you, then Syfe Select may be the better option.
But for me, this isn’t the case.
While I do invest in more than 1 ETF, the alternating strategy I stated above is something that I’m fine with and will continue using.
As a result, the conclusion that Syfe’s fees are more expensive than DIY investing is true for me.
The difference in fees may seem small, but remember that Syfe’s fees were calculated assuming an average annual investment sum of S$10k.
As this amount grows, so will the fees and the disparity.
So the only real benefit I would stand to gain is more efficient investing due to Syfe supporting fractional shares.
But I don’t think this alone is worth paying higher fees for.
If Syfe Select had been a thing when I first started investing and only had a small amount to invest, it may be something I would’ve used.
The experience it provides for DIY investing at a low cost is pretty attractive for a beginner.
Syfe Referral Code
Signing up with a Syfe referral code grants you a 3-month waiver from the management fee.
If you want to use Syfe Select or if you just want to try out Syfe to see if you like it, you can use my referral code “SRPT54W4C“.
It will go a long way in helping me maintain the blog to continue posting content regularly!
I think Syfe Select’s custom portfolios are an amazing option to have for beginner investors who are just getting started and want to experience DIY investing on a less intimidating platform.
Fractional shares and no minimum fees make it efficient, convenient, and affordable for anyone to get started with DIY investing, even if they only have a small amount.
Having only a single management fee makes it easier for beginners to know how much they can expect to pay and avoid having to worry about paying extra fees for making mistakes.
However, this fee will quickly snowball into a large sum as the total investment sum grows, depleting investment returns.
This isn’t so much an issue with Syfe Select in itself, but rather with the fee structure of robo-advisors in general.
Whether this fee is worth paying for is up to individual investors and how much they value the convenience that Syfe Select provides.
Will you use Syfe Select? Let me know in the comments below!