SoFi has launched its latest ETF, the SoFi Enhanced Yield ETF (NYSE Arca: THTA), on the New York Stock Exchange. THTA seeks to generate income by combining a strategy of holding short-duration U.S. Treasuries with a “credit spread” option strategy to generate enhanced yield.
While rooted in U.S. Treasuries, THTA looks to capitalize on volatility using option spreads. It leverages Treasuries as collateral to generate additional income on top of them. It can potentially generate income in a range of market conditions.
According to SoFi, investors can use THTA as a higher-yield product from alternative income to balance their portfolios. The actively managed ETF charges 49 basis points.
From Student Loans to ETFs
Social Finance Inc. was originally founded in 2011 as a student loan refinance company. It’s since evolved to offer an array of products and services, including ETFs, through its investment management business, SoFi Invest.
Tobin McDaniel, head of said investment management business, told VettaFi that the company’s “goal is to be a top-10 financial institution.” This means providing “all the products and services someone needs,” including “lending, checking/savings, financial planning, investing, and investing products.”
The company launched its first ETFs in 2019: the SoFi Select 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX ). Since launching those two ETFs, it has listed roughly two funds per year.
Its first thematic ETF was the SoFi Social 50 ETF (SFYF ), which tracks the top 50 U.S. stock holdings in its self-directed brokerage accounts. Other thematic ETFs include the SoFi Be Your Own Boss ETF (BYOB ), the SoFi Web 3 ETF (TWEB ), and the SoFi Smart Energy ETF (ENRG ).
McDaniel added that ETFs will play a crucial role in the company’s growth. “Providing investment products as part of that business is a long-term strategy we’re working towards,” he said. “It’s an area that we’re focused on.”
He added: “If we fast forward to five or 10 years from now and we are all that much bigger as a financial institution, this is an important part of that.”
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