Singapore-based robo-adviser and digital wealth manager Syfe has launched operations in Hong Kong, marking its first foray outside its home market.

The expansion comes less than a year after the company secured S$40 million (US$29 million) in Series B funding in July 2021.

Launched only in 2019, Syfe has experienced success in its home country, and hopes to replicate the same in Hong Kong, where it offers investors nine portfolios – four of which are called Core portfolios designed to build an investor’s essential financial goals, and five are thematic portfolios which function as satellite portfolios to complement the Core.

Syfe’s thematic portfolios provide exposure to opportunities in disruptive technology, healthcare innovation, China growth, global income, and ESG and clean energy, while the Core portfolios “maximize risk-adjusted returns by holding equities, bonds and gold in varying allocations”.

Each Core portfolio is also broadly diversified across asset classes, sectors and geographies.

Direct indexing

“We see tremendous potential in the Hong Kong market given the current nascent stage of growth for digital wealth management platforms coupled with a high savings rate and rising cost of living,” says Dhruv Arora, Syfe founder and chief executive officer.

Arora says Syfe’s Core portfolios and its disruptive technology thematic portfolio are exclusive to Hong Kong, and leverages the direct indexing strategy for its US equity component of each of the portfolios, in place of US exchange-traded funds (ETFs). This significantly reduces expenses, the company says.

In direct indexing, an investor directly owns the underlying individual stocks in their portfolio, while gaining the same broad market exposure at a low cost, compared to that of an ETF or index fund.

“The key benefits of direct indexing include greater transparency for investors who will be able to know exactly what they own, cost savings of up to 90% of fund fees, and reduction in the overlap of stocks,” Syfe says.

The direct indexing strategy is similar to Syfe’s approach in building its widely popular Syfe REIT+ portfolio in Singapore, where investors directly own a portfolio of 20 real estate investment trusts (Reits) which track the SGX iEdge S-REIT Leaders Index. The company sees this as “the next evolution” of passive investing, after index funds and ETFs gained widespread popularity over the last few decades.

Wealth hubs

Arora says as the company grows its presence in Hong Kong, Syfe will continue to introduce unique solutions to meet the needs of users “who are eagerly seeking new ways to grow their wealth”.

“We are very confident of succeeding in Hong Kong as we have in Singapore,” he adds.

Hong Kong is just the first in its planned Asia expansion. “With Syfe making its entry into Hong Kong, the company is now firmly present in two of Asia’s leading wealth management hubs. We will continue to make broad strides toward our vision of being the leading digital investment platform across Asia,” Arora says.

Syfe benefited from the accelerated adoption of digital technology amid the Covid-19 pandemic: its assets under management quadrupled in 2021, while headcount surpassed 100.

Syfe’s platform has no minimum investment amounts and annual fees are kept low, starting at just 0.35% per annum of the total amount invested.