SoFi launches gig-focused ETF
SoFi is one of the leading fintech startups to emerge from San Francisco and breach the financial markets. Originally started as a way to better finance student debt, it has since expanded to include products targeted at personal loans and home loans.
Today, the company announced a new exchange-traded fund (ETF) product focused on the gig economy. GIGE, which trades on Nasdaq, is an actively managed fund advised by Toroso Investments that allows investors to capitalize on this hot sector of the economy. Toroso offers a range of services around creating and managing ETFs.
The company also announced the creation of an ETF focused on high-growth stocks. That ETF, which trades as SFYF on the NYSE, is designed to identify and capture the growth of the top 50 of the 1,000 largest publicly traded issues.
It has formerly used that growth focus to create two ETFs, targeting 500 high-growth companies under the trading name SFY and a product it called “SoFi Next 500 ETF,” which trades under SFYX, both of which have no management fees.
SoFi’s SFYF fund is composed specifically of public companies that show the strongest growth on three key metrics: top-line revenue growth, net income growth and forward-looking consensus estimates of net income growth.
For its GIGE fund, SoFi defines the “gig economy” as a group of companies that “embrace and support the workforce in which employment is based around short-term engagements that allow for flexibility and personal freedom and temporary contracts.”
SoFi’s new funds add value to investors primarily through providing 1) access to industry disruptors at 2) an earlier-stage point in their growth cycle.
In recent years, more and more investors have been trying to get a piece of the hottest tech companies earlier with a growing number of traditional institutional investors now dipping their toes into startup and tech investing.
Furthermore, a number of platforms and funds were launched to support the high-demand for access to some of the top public and private companies and major disruptive trends, including funds focused on themes such as artificial intelligence, big data, cybersecurity or the next manufacturing revolution.
SoFi argues that its GIGE fund offers compelling value due to the speed at which it offers investors access to new equity issues, as the fund is structured so that most post-IPO companies can join the GIGE within 31 days of IPO, relative to the 60-90 days traditional passive funds that often have to wait to add a newly IPO’d company.
Additionally, because SoFi’s GIGE fund is actively managed, SoFi is also offering fund investors access to experienced asset managers and an alternative to algorithmic, machine-led passive funds that have increasingly dominated the capital markets.
“Our members are excited by high-growth and gig economy companies because these companies are in many cases part of their lives,” said SoFi CEO Anthony Noto in a press release. “We’re giving our members a way to get started investing by buying what they know and investing in themselves.”
The announcement is the company’s latest step in its attempt to further establish itself under the new guard of CEO Anthony Noto, formerly of Goldman Sachs, who replaced former head Michael Cagney in 2018, as the company looks to move further away from dark clouds in its past established by lawsuits, sexual harassment claims, FTC penalties and chunky rounds of layoffs. In the past week, the company also announced that CMO and former COO, Joanne Bradford, will be leaving the company at the end of May, though the split was reportedly long-planned and amicable.
The launch of SoFi’s new investment products also comes just weeks after the company was reportedly in discussions to raise $500 million from the Qatar Investment Authority.
To date, SoFi has raised roughly $2 billion in venture capital, according to data from Crunchbase, with backing from a number of Silicon Valley and Wall Street heavy hitters, including SoftBank, Silver Lake Partners, Morgan Stanley, Founders Fund and a host of others.
Already at a valuation of nearly $4.5 billion, according to PitchBook, SoFi appears well on its way to an eventual IPO. Noto, however, noted in a recent interview with Yahoo Finance that “an IPO is not a priority at this point” for SoFi as the company remains focused on executing on a high-quality sustainable growth path.