As an active investor myself, I spent countless hours browsing through different reports of the companies I am researching in order to be a step ahead of the other investors when it comes to investing.

Even so, it is always difficult to be a step ahead when the market works almost round the clock twenty-four hours a day (businesses run in multiple different time zones). Furthermore, it is also impossible to expect every individual to spend the same amount of effort and training to obtain the desired results that they are expecting in every economic cycle.

Capitalizing on these limitations, Syfe came bursting the scene in 2019 - with a goal to make investing easily accessible to every individual.

About Syfe

Laying the foundation as one of the early robo-advisors in Singapore, Syfe is a twenty-first century digital wealth manager whose modus-operandi is to offer a diverse range of portfolios for investors of all stripes, from 100% equities to 100% REITs.

The company is licensed and regulated by the Monetary Authority of Singapore ("MAS") under a Capital Markets Services ("CMS") License for conducting retail fund management activities so investors can be sure that their money will be safeguarded.

A schematic approach of Syfe's investment product workflow is tailored to meet the suitability of the client based on his or her investment objectives, risk tolerance and other heuristic factors that leads to the most optimal risk-adjusted return.

One of the products which we will be covering today is its latest launch - the Core Portfolio.

Core Portfolios

Managed by Syfe's experienced investment team, the Syfe Core Portfolios are curated as an all-in-one portfolios that hold a mixture of equity, bond, gold ETFs.

Depending on the types of Core Portfolios which investors can choose from, this will portray a different mix of each allocation that will cater to each investor's risk appetite. 

The portfolio retains its growth characteristics through the equity allocation but provides an additional defensive to the portfolio with the inclusion of bond and gold, which tends to typically outperform during periods of uncertainty. Furthermore, the portfolios are constructed using an Asset Class Risk Budgeting approach to achieve a stable asset allocation, making it ideal for investors who are looking for passive investing.

The equity component and allocation in the Core Portfolios are optimized using Smart Beta factors, namely growth, low-volatility, and China exposure.

The three portfolios within Syfe's Core that investors can choose are: 

- Core Defensive

- Core Balanced

- Core Growth

Let's take a look at each of them and how they cater differently to each investors' risk appetite.

Core Defensive

The Core Defensive portfolio is a low-risk portfolio that is invested mainly in high-quality bond ETFs. It also contains an allocation to stock and gold ETFs for added diversification.

As of the last update on the 12th April 2021, its asset allocations within the portfolio consisted of 71% Bonds, 20% Equity and 9% Gold.

The majority of the components of the Bond ETFs within the portfolio is concentrated on US Treasury with maturity ranging from 1 to 20 years. In fact, US Treasury alone makes up more than 50% of the entire component of the Core Defensive portfolio.

Clearly, as the name itself suggests, this portfolio is designed for investors who are more risk-averse and prefer stable returns that can beat inflation.

According to Syfe, Core Defensive should not lose more than 9% per year, with a greater than 95% degree of confidence.

A back-testing strategy was performed to see how the portfolio would have performed if it were incepted 8 years ago. The performance of the Core Defensive portfolio based on historical performance returned 4.9% per annum on average. 

Core Balanced

The Core Balanced portfolio is a medium-risk portfolio with an optimal mix of stock, bond and gold ETFs. The asset allocation focuses on better risk-adjusted returns, with the ETFs collectively invested in over 3,500 stocks of the world's top companies.

As of the last update on the 1st April 2021, its asset allocations within the portfolio made up of 50% Bonds, 39% Equity and 11% Gold.

While the highest component of Core Balanced is still US Treasury, the portfolio also holds the Invesco QQQ ETF which focuses on technology stocks. This is to inject a little more growth into the portfolio from the rising trend of technology adoption across the world.

At the same time, the portfolio also provides a global stock exposure via iShares MSCI EAFE ETF (developed market exposure), iShares Core S&P 500 UCITS ETF (US exposure), iShares MSCI China ETF (China exposure) and iShares Core MSCI Emerging Markets ETF (emerging market exposure).

Nevertheless, as the name itself suggests, this portfolio is designed for investors who are comfortable sitting in the middle of both risk-averse and risk-seekers and would like to seek a stable long term return for his or her portfolio.

According to Syfe, Core Balanced should not lose more than 13% per year, with a greater than 95% degree of confidence.

A back-testing strategy was performed to see how the portfolio would have performed if it were incepted 8 years ago. The performance of the Core Balanced portfolio based on historical performance returned 7.2% per annum on average. 

Core Growth

The Core Growth portfolio is a higher risk portfolio that is invested mainly in stock ETFs. These ETFs collectively invest in over 3,500 stocks of the world's top companies. To provide additional diversification, the portfolio also contains an allocation to bond and gold ETFs.

As of the last update on the 1st April 2021, its asset allocations within the portfolio consisted of 70% Equity, 25% Bonds and 5% Gold.

As the name itself suggests, the Core Growth portfolio is heavy on the equity component across different sectors and countries. This means the portfolio retains its global characteristics yet provides additional strategic exposure to China and other sectors such as technology and consumer discretionary to capture the promising future yield and growth potential.

The portfolio is designed for investors seeking to maximize the long-term risk-adjusted returns of their portfolio and who are comfortable with short-term market volatility.

According to Syfe, Core Growth should not lose more than 19% per year, with a greater than 95% degree of confidence.

A back-testing strategy was performed to see how the portfolio would have performed if it were incepted 8 years ago. The performance of the Core Growth portfolio based on historical performance returned an impressive 11.2% per annum on average. 

My Thoughts

I can see how the Core Portfolios can have an important place in anyone's portfolios.

Based on the asset allocation created for each of the portfolios, you can see what they are trying to do - i.e to be market-agnostic admitting that none of us know what the future will hold yet each allocations that have been carefully crafted are designed to serve differently for each investor with his or her own unique risk appetite.

The inclusion of bond ETFs and gold ETFs in each of the three crafted portfolios are often overlooked by investors - and this is understandably so given that the general market sentiment has been bullish in the past few years but these are nevertheless crucial asset classes that are likely to provide cushion to the portfolio when things go most unexpected.

To analyze each portfolio's volatility and investment's risk based on the respective allocation, you can view them from the portfolio's standard deviation - which is the rate of return used to measure the inherent volatility of the portfolio.

You can see that the inclusion of gold and bonds as part of the asset allocation in the portfolio helps to mitigate the downside risk in a period of uncertainty, thereby reducing the volatility risk while equity portion helps to boost the annual return in a period of growth.