Market Overview

Get Social With This New SoFi ETF

Get Social With This New SoFi ETF

SoFi stands for “social finance” and the firm is leaning on those roots in a revamp of the SoFi 50 ETF (NYSE: SFYF).

What Happened: The fintech is reconfiguring that exchange-traded fund into the SoFi 50 ETF. The new-look fund retains the ticker “SFYF” and tracks the SoFi Social 50 Index, a basket of the 50 stocks most widely held by users of the SoFi platform.

For some younger investors, that strategy could be appealing and some evidence suggests it will, given millenials' and Gen Z's enthusiasm for the popular Robinhood trading app.

Why It's Important: “Our members have consistently expressed interest in investing in the same stocks as their friends and peers. We've been evaluating the SoFi Social 50 Index since October and it has outperformed the S&P 500 by over 20% since then," said SoFi CEO Anthony Noto in a statement.

As noted above, SFYF remains an index-based ETF, but there is an active level of rebalancing involved as “stocks are rebalanced monthly and weighted according to how much money members have invested in each company at the end of every month,” according to SoFi.

At the end of May, SoFi had more than 100,000 self-directed brokerage accounts, potentially creating diverse possibilities on a month-to-month basis for SFYF.

What's Next: Data on SFYF's lineup is still sparse, but assuming SoFi's core demographic is younger investors and traders, it's not unreasonable to expect that SFYF will often be heavily allocated to the communication services, consumer cyclical and technology sectors.

Earlier this year, SoFi said Tesla (NASDAQ: TSLA) surpassed Apple (NASDAQ: AAPL) as the most widely held stock on its platform.

SoFi also features a platform known as “SoFi Bits” that allows investors to purchase fractional shares of stocks with as little as $1 per order.

SFYF retains its prior expense ratio of 0.29% per year, or $29 on a $10,000 investment.


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