SoFi Select 500 ETF retains its Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in quality exposure and an overweight in yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including overall low fees and high portfolio management retention.

Analyst Rating

Amazon

Microsoft

Apple

NVIDIA

Tesla

Exxon Mobil

Alphabet

salesforce.com

Meta

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. SoFi Select 500 ETF earns an Above Average Process Pillar rating. 

The main contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 100% also buttresses the process. Lastly, the process is limited by the small size of its portfolio management team of one.

 This strategy tends to hold smaller, deeper value companies than its average peer in the Large Growth Morningstar Category. Examining additional factor exposure, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy's portfolio also has had exposure to more stocks with high dividend or buyback yields over peers in these years. Higher-yield stocks can provide dependable income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. Additionally, the strategy has demonstrated a contrarian approach with relatively low exposure to momentum stocks during these years. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. In recent months, the strategy also had less Momentum factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in energy and financial services relative to the category average by 6.2 and 3.0 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, underweight the average by 10.5 and 4.5 percentage points of assets, respectively. The portfolio is positioned across 504 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 29.9% of the portfolio's assets were concentrated in the top 10 fund holdings, compared to the category’s 54.8% average.

Above Average

Process

Sofi’s team receives a Below Average People Pillar rating. The team is strengthened by the firm's five-year retention rate of 100%. However, the rating is weakened by the managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns. The number of months that the management team has been running this vehicle together also holds the rating back.

Below Average

People

In a competitive industry, Sofi doesn't differentiate itself enough, leading to an Average Parent Pillar rating. One area of strength is the firm’s favorable fees for open-end and exchange-traded funds, demonstrating a firm-wide commitment to minimizing costs and maximizing investors’ returns. Fees for funds are, on average, within the lowest quintile of similarly distributed strategies. Sofi has brought continuity to its product shelf, with low portfolio management turnover compared with peer firms since the firm's inception. With an average three-year Morningstar Rating of 2.0 stars, the risk-adjusted performance of Sofi's open-end and exchange-traded funds falls short of competitors.

Average

Parent

SoFi Select 500 ETF

SFY tracks a multi-factor-weighted index of US large-cap equities selected by market-cap.

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Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the SoFi Select 500 ETF (SFY) is a smart beta exchange traded fund launched on 04/11/2019.

Is SoFi Select 500 ETF (SFY) a Strong ETF Right Now?

Launched on 04/11/2019, the SoFi Select 500 ETF (SFY) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Growth segment of the US equity market.

Should SoFi Select 500 ETF (SFY) Be on Your Investing Radar?

SFY is a well-diversified ETF holding 500 of the largest U.S. securities. Similar to SPY, it's outperformed since its inception, and routinely features a higher trailing and estimated growth rate. By incorporating a composite growth score into its weighting process, SFY has about 50% less exposure to Magnificent Seven stocks than most growth funds, including VUG, SCHG, and QQQ. However, I've downgraded SFY because its forward PEG ratio has increased from 1.35x to 2.45x in the last year, signaling that growth stocks are too richly valued.

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SoFi Select 500 ETF offers exposure to the 500 largest US companies without a management fee, but the fee waiver will end in June 2024. SFY's proprietary weighting methodology does not add value, as it has underperformed market ETFs like SPY. Investors should consider other ETFs such as SPY or QQQ, which have better risk-adjusted returns and lower fees once the fee waiver period ends.

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Year after year, investors say that expense ratio matters most when choosing an ETF. While I've long advocated for investors to dive deeper to understand what's inside the funds they own or are considering, what has become clear is that awareness is key to an ETF being selected.

If Expense Ratio Really Mattered, Most of These ETFs Would Dominate

SoFi Select 500 ETF is a pretty simple value-based exchange-traded fund that focuses on healthcare and technology a little more than the SPY ETF. The expense ratios are substantially higher though than SPY-tracking ETFs.

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SFY follows a proprietary screening method to reweight 500 of the largest U.S. companies by their revenue and earnings growth rates. SFY's growth and valuation metrics usually fall somewhere in between SPY and SPYG, two proxies for large-cap blend and growth. However, that's not the case today.

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SFY is a relatively new zero-cost ETF that will appeal to the moderately aggressive growth investor. It's slightly outperformed SPYG through the current downturn but lags the S&P 500 Index. The portfolio's forward price-earnings ratio has been reduced substantially since my last article in February. SFY now trades at 23.62x forward earnings, almost the same as SPY.

SFY: This Zero Fee, Growth-Light ETF Performs As Expected

Assuming fees waiver, SFY is a zero-expense ETF offering exposure to the U.S. bellwethers exhibiting growth characteristics. It scores nicely against quality and growth metrics while having small exposure to value and pure-value stocks.

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The SoFi Select 500 ETF is the only zero expense ETF available in the large-cap growth category, and since April 2019, has grown to $338 million in AUM. Expenses aren't the only thing that's zero, though. There are also zero screens for quality and zero screens for valuation.

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News for SoFi Select 500 ETF ETF (SFY)