I recently accumulated a tidy amount inside my SRS account as an endowment fund had reached maturity. The timing also coincided with my year-end top-up to SRS which was intended to reduce my tax bill. Wary of leaving my SRS funds idle, I decided to look around for robo-advisory solutions that accept SRS funds. This led me to Endowus as its platform offers investment products that accepts cash, SRS and even CPF OA funds. After some due diligence, I took the plunge and started a portfolio under Endowus Fund Smart. Here is my review of investing my CPF and SRS funds with Endowus.
Endowus Fund Smart
Amongst the various investment products (General Wealth Accumulation and Cash Smart) offered, I find that Fund Smart suits my investment objectives the most. Endowus Fund Smart grants investors the flexibility of a DIY approach by customising their respective portfolios from a curated list of unit trusts. Here are the reasons why I have picked Fund Smart.
1) Thematic Investing Now Possible
With Endowus Fund Smart, I can realise my investment objective of thematic investing. As I am able to pick from a basket of unit trusts, I can select sectors and markets that I am bullish on. To construct my portfolio, I can select up to a maximum of 8 unit trusts and decide on their respective allocation as shown in Diagram 1.
As shown, I have tactically overweight specific regions and asset class. I am optimistic that China and India, the 2 largest emerging economies by population, will deliver strong economic growth in the future. These are macro-economic themes that I am optimistic in. Given that the penalty-free withdrawal age for SRS funds is 62 for my case, this is a long runway which allows me to take slightly more risks. Besides these 2 funds, the rest of the portfolio largely consist of funds managed by industry heavyweights such as Dimensional and PIMCO. They are accumulation share class whereby any dividends or interest received will be reinvested back into the funds with no additional charge.
To sum it up, Endowus Fund Smart really appeals to self-direct investors like me who gets to decide exactly where to place their money in.
2) Shortlisted Unit Trusts Already Filtered By Endowus
There’s over 50 underlying funds to choose from for Fund Smart and they did not make it to the shortlist by chance. Each of them has been screened based on Endowus’ investment criteria:
- Best in Class
- Alignment in Values
- Asset Class Fit
- Lowest Cost Achievable
Basically, I am comforted that any of the unit trusts I pick would have passed the stringent criteria. Even as an active retail investor, it will not be possible for me to perform the due diligence work with the same rigour as its investment team. I have also met the people behind Endowus and am quite comfortable to pick on their brains when it comes to this aspect. Therefore, I am happy for Endowus to do the heavy lifting here which explains why I feel that they more than deserve the platform/management fee paid.
3) Low Fees
The truth is that not everybody can be a Sovereign Wealth Fund, pension funds etc which typically enjoy a differentiated level of fees charged by the fund manager. Thanks to Endowus, we are now able to access institutional-level fees on its platform even though we are mere mortals (retail investors). This is in addition to the fact that Endowus rebates all recurring commission fees, known as trailer fees in investment parlance, that it receives from the funds. This results in one of the cheapest fees charged in Singapore by an investment platform. We all know that fees eat into our returns, so this is a huge advantage that should not be overlooked.
4) Lowers Barrier to Entry
To gain access to any of the funds listed on Endowus Fund Smart would have typically required several thousands via other sales channels. Endowus has set a minimum investment amount of $100 per portfolio investment which significantly lowers the barriers to entry for beginner investors. Accessing up to 8 funds with such a low quantum also allows for diversification which would otherwise have not been possible with a small war chest.
As aforementioned, I also like that these investments can be funded via multiple sources (Cash, CPF, SRS). Coupled with the low quantum requirement, I am able to set up a recurring monthly investment, also known as Dollar Cost Averaging (‘DCA’) as shown in Diagram 2.
5) Portfolio Simulation
It’s amazing that despite all these mixing and matching, Endowus is still able to spit out the portfolio simulation in seconds. I am no computer expert but I can imagine that a lot of sophistication went into it. From the portfolio simulation as shown in Diagram 3, you will be able to derive key information such as:
- Historical Average Annual Return
- Historical worst to Best 1 Year Returns
- Projected Median Return
- Net Fees
I find this feature greatly enhances the user experience. It allows me to visualise how things will pan out if historical returns are extrapolated. A quantified return from this portfolio is just like another jigsaw that enables me to understand where it fits in my retirement portfolio puzzle.
More importantly, if I do not find something too comfortable, I can quickly tweak the allocation of chosen unit trusts to achieve my desired risk-reward profile. It also provides me insights of the extent of losses during a bear market. As you can also see in Diagram 3, the platform alerted me that my customised portfolio is not aligned with my preferred risk tolerance which was ascertained based on my answers to the questions asked earlier.
Finally, you should be able to gain confidence in the long-run performance of your chosen portfolio by seeing its historical performance as shown in Diagram 4.
Of course, we need to take heed that past performances do not guarantee future outcomes. But I have a long runway for this expectation to materialise.
6) Dynamic Rebalancing
I had chosen 70% Equity and 30% Bond asset allocation for my portfolio initially. I logged in onto the Endowus mobile app to see how my current portfolio has changed as shown in Diagram 5.
As my portfolio is only a couple of months old, the asset allocation has not wavered significantly. I understand that Endowus offers dynamic rebalancing and emails will be sent on possible periods when rebalancing should take place. It is not mandatory to rebalance, but this is a feature that I appreciate especially since it comes at no extra cost. I will update my blog article if the notification to re-balance does occur!
Promo Code to Get $20 Access Fee
If you think that Endowus is a suitable platform for your investment needs, you can use my referral code (https://endowus.com/invite?code=GTOZS) to open an account and get $10,000 AUM managed for free for 6 months. This sign-up bonus is equivalent to access fee of $20. [Take note of its CNY promo which lasts till 14 Feb where the sign-up bonus is bumped up to $28 instead!]
To conclude, I am particularly impressed with Endowus’s built-in analytical tools that are able to conduct a holistic review of my customised portfolio risk and returns while paying a very competitive fee.
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