About Core Portfolios

• How do Core portfolios work?

  Core portfolios hold equities, bonds and gold in varying allocations. We use exchange-traded funds (ETFs) to represent each asset class to ensure that each portfolio is broadly diversified across sectors and geographies.

  Our portfolio methodology for Core rests on three guiding principles:

  • Asset Class Risk Budgeting
  • Smart Beta
  • Stable asset allocation

  Please see more details of our portfolio construction methodology here.

  Clients can choose from four different Core portfolio types depending on their investment goals, time horizon and risk appetite:

  • Core Defensive
  • Core Balanced
  • Core Growth
  • Core Equity100

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• What is a factor, and why should I care?

  First let’s consider the various investment options available to us. At one extreme we have passive index funds, which have low fees and track the performance of indices like the S&P 500 and MSCI World.

  At the other extreme you could invest in an active fund, where individual stocks are chosen with the aim of outperforming their benchmark (typically the most appropriate index, e.g. MSCI World Index if selecting stocks globally). These have higher fees and can have larger swings in performance. In fact, the vast majority of the time, 87.98% (Source: S&P Global, as of Dec 31st 2023), these funds underperform their respective benchmarks.

  Factor investing sits in between, but what is a factor I hear you ask… well, a factor is a characteristic that can help explain why certain groups of securities may perform the way they do in terms of risk and return.

  The following are examples of factors; value (for under-valued companies), size (companies with smaller market capitalisations) and quality (companies with strong profitability, stable earnings etc.).

  Academic research (notably Fama-French) shows that these characteristics explain significant amounts of stock performance over time. One can use factors to seek better risk-adjusted returns than simply following an index or trying to hand-pick stocks.

  We find analogies often help, so let’s imagine we’re purchasing a car…. 

  1. The passive approach would be to buy the standard model, which will be cost-efficient and gets us from point A to B. 
  2. The active approach would be to heavily modify the car, swapping out most of the parts. Whilst we may get a faster car, it could be more dangerous or we may significantly impact the reliability and long term durability.
  3. The factor-based approach would be to add a few key upgrades which will most improve the car. We could invest in better tyres, fuel and brakes to enhance our mileage and safety, without sacrificing reliability.

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• What are the different types of Core portfolios?

  There are four types of Core portfolios.

  The key difference between each Core portfolio is their exposure to stocks and bonds, which in turn determines their overall risk level. In a nutshell, Core portfolios with a greater equity allocation (and lower bond allocation) will have higher potential returns, but the addition of increased risk. 

  

  Choosing between the four Core portfolios very much depends on your investment goals, time horizon, and risk appetite. Here’s a quick guide to help you understand which portfolio is right for you:

  • 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.

    The portfolio is designed for investors who prefer stable returns 

    A defensive portfolio generally focuses on lower-risk investments to generate steady returns that are better than what a traditional savings account can generate. Although the return potential may be lower compared to a growth-focused portfolio, the higher exposure to bonds helps limit short-term fluctuations. Learn more about Core Defensive portfolio here. 
    
    

  • 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.

    A balanced portfolio aims to balance risk and reward by holding both equities and bonds in a more or less equal split. It is designed for investors who are willing to take on some risks to achieve moderate long-term growth, while still having an exposure to bonds and gold to cushion their portfolio during market declines. Balanced portfolios are generally less likely to experience the large fluctuations an equity-heavy portfolio could encounter. Learn more about Core Balanced portfolio here. 
    
    

  • 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.

    A growth portfolio is one that’s predominantly invested in equities, with a smaller allocation to bonds and other assets for diversification. Historically, stocks have delivered higher returns than bonds. As such, a larger allocation to equities tends to help maximise your return potential.

    The Core Growth portfolio is generally more suitable for investors with a long-term investing horizon who are comfortable with short-term market volatility. Learn more about Core Growth portfolio here. 
    
    

  • Core Equity100
    Core Equity100 is 100% allocated to global equities. The portfolio holds equity ETFs which collectively invest in over 1,500 stocks of the world’s top companies, aiming to achieve global diversification.
    

    Syfe selects ETFs that are liquid and have low expense ratios to minimise costs and maximise returns. Additionally, Core Equity100 uses a Smart Beta strategy that takes into consideration the following factors: growth and value, volatility and country exposure. 

    The portfolio is designed for investors who want maximum exposure to global equities and are willing to take on higher systematic risks to potentially generate better returns relative to a traditional passive indexing strategy. For investors seeking low-risk investments, this portfolio may not be appropriate. Learn more about Core Equity100 portfolio here. 
    
    

  Still unsure which portfolio is the most suitable for you? Schedule a complimentary consultation with our wealth experts here. 

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• Where can I see a list of the ETFs within Core portfolios?

  If you already have a Core portfolio, simply log in to your account, tap on your portfolio, and click on the 'Composition' section to see a list of the ETFs within your Core portfolio.

  Alternatively, you can view the composition of Core portfolios via our website, in each portfolio's factsheet page. For ease, simply click on the links below:

  • Core Defensive portfolio factsheet
  • Core Balanced portfolio factsheet
  • Core Growth portfolio factsheet
  • Core Equity100 portfolio factsheet

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• Can I change the composition of my Core portfolio?

  You will not be able to do so.

  The composition in each Core portfolio have been carefully chosen to offer you the most efficient portfolio allocation according to different investment goals, time horizon and risk appetite. Changing the portfolio composition may result in your returns being negatively impacted over time.

  If you would prefer to customise your own portfolio, you may consider investing in Select Custom portfolio instead. 

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