New ETFs Target Gig Economy, Growth

May 08, 2019

SoFi, a newcomer to the ETF space, rolled out two new funds today, bringing its total ETF lineup to four. The SoFi Gig Economy ETF (GIGE) and the SoFi 50 ETF (SFYF) are designed to appeal to SoFi’s overall customer base.

GIGE comes with an expense ratio of 0.59% and lists on the Nasdaq stock exchange, while SFYF charges 0.29% and lists on the NYSE Arca.

SoFi is known as a personal finance company, and started out providing student loan refinancing. However, over the last few years, it has expanded its range of services to include mortgages, personal loans and investment products. The ETF family is part of the fund’s investment platform, along with brokerage and robo advisor services, according to SoFi representatives.

The firm’s customers skew toward the young and highly educated, who have high income and good credit, and SoFi says it focuses on offering products that will help that demographic achieve their financial goals.

The Funds

GIGE is actively managed and focused on the gig economy in that it targets companies involved in all aspects of the space, ranging from commission-based platforms to social media and messaging platforms.

Companies are divided into tiers based on their level of involvement in the space, with companies directly involved in generating revenue from the gig economy being weighted at 30-60% of the fund, while those companies merely expected to benefit from the effects of the rise of the gig economy receiving a total weight of up to 10%, according to the prospectus. Companies falling into categories providing support services to the gig economy fall into the tiers in between those.

SoFi says its members are deeply ingrained in the gig economy, and it is a theme they are familiar with and care about. Its fund offers a diversified way to get exposure to the space.

Meanwhile, SFYF offers an index-based smart beta take on the large cap growth space. The fund selects its components from a universe comprising the 1,000 largest stocks in the U.S. market. The methodology scores each of those eligible components based on trailing 12-month sales growth, trailing 12-month EPS growth, and 12-month forward-looking EPS growth consensus estimates. The 50 companies with the highest scores are selected for the index and equal-weighted, the prospectus says.

Due to the longer investment horizons of its relatively young member base, SoFi has been focused on offering growth-oriented funds. Indeed, its first two launches, the SoFi Select 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX), provide well-diversified growth-tilted exposures to the large cap and midcap segments of the market. SFYF is somewhat more intensely focused on growth exposure with a narrower portfolio.

Contact Heather Bell at [email protected]

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