The Singapore robo-advisor has rolled out a “Reit+” product, that will invest in 15 SGX-listed real estate investment trusts (S-Reits) that range across the retail, industrial, office, residential and hospitality sectors.
Syfe’s ARI will manage risk by balancing holdings of the S-Reits with a portfolio of Singapore government bonds.
“Allocations are made by ARI, our proprietary investment strategy without human bias, and monitored by our investment team who designed the algorithm,” Dhruv Arora, founder and CEO of Syfe told FSA.
The ARI strategy combines two approaches – “global market portfolio”, which aims to create the most efficient blend of asset classes, and “risk parity portfolio”, which weights assets by their risk impact not just their market cap. The aim is that ARI automatically adjusts an individual’s portfolio to ensure enhanced risk-adjusted returns by managing its downside risk.
“Currently, the split between S-Reits and bonds is roughly 3:1, but this will change based on our algorithm and daily simulations to ensure that the downside risk is stable at 15%,” he added.
The investment universe of 15 S-Reits will also be reviewed regularly and adjustments will be made if necessary, he said. Initially, they will include S-Reits managed by Capitaland, Frasers Centrepoint, Mapletree and Suntec.
Syfe S-Reits Composition
According to Arora, after backtesting the algorithm, the Reit+ portfolio has generated a 9% return over the past five years. The portfolio also pays a dividend, which in 2019 was 4.6%, and can be automatically reinvested or paid-out out quarterly.
The annual management fee is 0.4%.
Syfe holds a capital markets services license for retail fund management from the Monetary Authority of Singapore. It launched a “global portfolio” made up of equities, bonds, commodities and ETFs, in July 2019 and a “human advisory” service in November. The firm has also partnered with Saxo Bank, State Street Global Advisors, DBS and AWS, who provide “expertise in finance and technology”, according to Arora.
However, Syfe faces stiff competition in the fast-evolving Singapore robo-advisor market.
For instance, last September Stashaway launched an income portfolio that invests in ETFs, which is available to both retail and accredited investors. It uses an “economic regime-based asset allocation framework”, that allows the portfolio’s asset allocation to automatically adjust in changing economic environments to maintain its risk level. Like the Syfe product, the annual fee is low and the aim is to generate both a high level income and capital appreciation.
Another Singapore-based robo-advisory firm, Kristal AI, also offers direct exposure to ETFs on its platform, as well as an advisory algorithm to create a personalised portfolio.