Here's how Syfe made investing cheaper

Investors are charged 0.65% of their investment made through the AI platform.

Retail investors that look to buy unit trusts or investment-linked policies are typically unable to access Singapore’s thriving financial market as sales charges and exit fees can hit 2-5% at each step. They will also need to pay management fees to wealth managers, regardless of performance.

This is a gap in the financial market that fintech startup Syfe aims to fill, according to founder and CEO Dhruv Arora. Syfe fancies itself as a digital wealth manager, focusing on risk management where investors would pay an annual fee comprising 0.65% of their investment, with no hidden fees and sales commissions included.

The platform harnesses the use of automated risk-managed investments (ARI), which is said to be a combination of two investment approaches, Global Market Portfolio (GMP) and Risk Parity Portfolio (RP). GMP is an investment approach where investable asset classes are classified by its market cap whilst RP focuses on risk impact.

Investors who want to use the platform will have to get through a risk profiler, which will then allow them to be matched to their corresponding risk level and recommended risk level. If the user is comfortable and goes ahead with the recommendation, Syfe builds and invests in a customised portfolio which is then constantly monitored.

Arora explained that Syfe’s typical clients are in their mid-30s to early 40s with varied professional backgrounds, most of which have university degrees in business, information technology, or engineering.

“Our edge is our genuine focus on risk. If my years as a trader have taught me one thing, it is that returns cannot always be forecasted, but risk can be predicted. You will see this theme throughout our platform,” Arora said.

Last July, Syfe secured US$5.2m in a seed funding round led by London-based venture capital company Unbound VC. Arora noted that the proceeds will be invested into their technology, as well as hiring more talent across finance, quantitative finance and data science.

“The real challenge for this round was finding the right set of investors. The risk is raising money from investors who do not understand the domain or have the goal of doing a ‘quick flip’ with their investment. Such marriages almost always fail,” he continued.

Shravin Bharti Mittal, founder and CEO of Unbound VC, added that they invested in Syfe because they shared the same sentiment on the lack of disruption in the financial services industry. “We truly believe the problem Syfe is solving is highly disruptive and transformational for the new generation. Unbound's core mission is to build and back the next generation of 100-year businesses and we believe Syfe's mission falls perfectly within that vision,” Mittal said.

He also added that his experience as senior VP of India-based online grocery delivery service Grofers gave them the comfort that he had the right background to tackle this problem.

“Over the months following, we identified in the depth the issue at hand and how Syfe would go about building a generational business. Finally, we gain key insight from our partners across the globe on the wealth management industry, the challenges currently faced in the industry and the expectation the new age consumers have from of wealth manager,” Mittal stated.