A smart beta exchange traded fund, the SoFi Select 500 ETF (SFY) debuted on 04/11/2019, and offers broad exposure to the Style Box - Large Cap Growth category of the market.
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Managed by Sofi, SFY has amassed assets over $454.21 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. SFY, before fees and expenses, seeks to match the performance of the SOLACTIVE SOFI US 500 GROWTH INDEX .
The Solactive SoFi US 500 Growth Index follows a rules-based methodology that tracks the performance of 500 of the largest U.S.-listed companies weighted based on a proprietary mix of their market capitalization and fundamental factors.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.05%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.50%.
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SFY, it has heaviest allocation in the Information Technology sector --about 40.20% of the portfolio --while Financials and Healthcare round out the top three.
Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 13.94% of total assets, followed by Microsoft Corp (MSFT) and Amazon.com Inc (AMZN).
SFY's top 10 holdings account for about 42.42% of its total assets under management.
The ETF has lost about -5.19% and it's up approximately 13.91% so far this year and in the past one year (as of 03/19/2025), respectively. SFY has traded between $88.15 and $114.95 during this last 52-week period.
The fund has a beta of 1.03 and standard deviation of 18.88% for the trailing three-year period. With about 504 holdings, it effectively diversifies company-specific risk.
SoFi Select 500 ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ) tracks NASDAQ-100 Index. Vanguard Growth ETF has $142.89 billion in assets, Invesco QQQ has $299.09 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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SoFi Select 500 ETF (SFY): ETF Research Reports
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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