{"id":742,"date":"2022-05-15T21:55:48","date_gmt":"2022-05-15T13:55:48","guid":{"rendered":"https:\/\/blog-hk.syfe.com\/?p=742"},"modified":"2022-06-02T15:54:00","modified_gmt":"2022-06-02T07:54:00","slug":"why-we-use-etfs-for-syfe-portfolios","status":"publish","type":"post","link":"https:\/\/www.syfe.com\/hk\/magazine\/why-we-use-etfs-for-syfe-portfolios\/","title":{"rendered":"Why we use ETFs for Syfe portfolios"},"content":{"rendered":"\n
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Syfe portfolios are designed to help you build long-term wealth by diversifying your investments and minimising your costs. To do that, we use exchange-traded funds (ETFs) as one of the building blocks of our portfolios.\u00a0<\/p>\n\n\n\n

What are ETFs?<\/strong><\/h2>\n\n\n\n

ETFs are gaining popularity among investors worldwide. And for good reason. In addition to having lower fees, ETFs make it easy for investors to access different asset classes such as stocks, bonds, and commodities.<\/p>\n\n\n\n

Simply put, ETFs are a basket of investments that mirror the performance of an index such as the S&P 500. For example, if you invest in a S&P 500 ETF, you\u2019re automatically invested in all 500 stocks that make up the index. Even if some stocks fall, you still have your investments in other stocks to make up for the loss. That\u2019s the beauty of diversification!<\/p>\n\n\n\n

ETFs are incredibly versatile instruments too. You can invest in almost any asset class, country, sector, or theme with ETFs.<\/p>\n\n\n\n

In terms of returns, ETFs aim to generate a return that closely reflects the performance of the index they track. So for an S&P 500 ETF, you can expect your return to be similar to the return of the S&P 500 index.<\/p>\n\n\n\n

ETFs pay dividends too, if the companies they are invested in pay dividends. The ETF will collect the dividends and issue them to you quarterly or semi-annually. The payment schedule varies between ETFs and some may pay out dividends on a monthly or yearly basis.<\/p>\n\n\n\n

ETFs as building blocks of Syfe portfolios<\/strong><\/h2>\n\n\n\n

Syfe uses a combination of ETFs in all our managed portfolios because they:<\/p>\n\n\n\n

Keep your costs low<\/strong><\/h3>\n\n\n\n

ETFs have much lower fees and expense ratios than actively managed investments like mutual funds. That\u2019s because ETFs passively tracks an index while active funds try to beat their benchmarks by picking and selling stocks. This frequently results in more trades and hence, higher costs.<\/p>\n\n\n\n

High fees eat into any excess returns the active fund manager is able to produce, which is why 96% of large-cap active funds have underperformed their respective benchmarks over the past 20 years. <\/p>\n\n\n\n

Ultimately, less money paid to your fund manager means more money for you.<\/p>\n\n\n\n

Offer cost-efficient diversification<\/strong><\/strong><\/h3>\n\n\n\n

As mentioned, ETFs offer access to virtually all investable markets. With a few ETFs, you can conveniently \u2013 and affordably \u2013 invest in global tech stocks the likes of FAANG (Facebook, Amazon, Apple, Netflix, and Google), or big-name brands from around the world such as Swiss consumer giant Nestle and Japanese carmaker Toyota.<\/p>\n\n\n\n

Due to their low cost and versatility, you can build an efficient and effective portfolio entirely from ETFs. For example, our\u00a0Syfe Core Growth portfolio<\/a>\u00a0holds a mix of stock, bond and gold ETFs alongside individual stocks to provide global diversification and broad-market exposure.<\/p>\n\n\n\n

On the other hand, our Healthcare Innovation thematic portfolio<\/a> consists of ETFs focusing on genomics, biotechnology, pharmaceuticals and other medical sectors to provide targeted exposure to the healthcare industry. <\/p>\n\n\n\n

Syfe also helps you reinvest any dividends received, at no cost. Reinvesting your dividends helps you take advantage of compound interest and is a better move for most investors.<\/p>\n\n\n\n

What ETFs does Syfe use?<\/strong><\/h2>\n\n\n\n

At Syfe, we select ETFs with these key features:<\/p>\n\n\n\n