‍Endowus Core-Flagship Cash/SRS Portfolio

The 100% Equity Portfolio fell by 0.1% in November, but outperformed the broader equity benchmark by 0.2%.

• November was an inflection point for global equities, which experienced increased volatility and lost steam to end the month down 0.3% after performing well throughout the course of the year. Concerns over data ambiguity from the prolonged US government shutdown and its potential impact on monetary policy weighed on investor sentiment. Additionally, concerns about overvaluation of AI-linked sectors continued to persist. As a result, November saw investors adopting a more defensive stance with a pronounced rotation away from cyclical and technology stocks towards defensive growth sectors such as healthcare.
• The 100% Equity Portfolio outperformed the global equity benchmark, due to its structural overweight to value and small-cap stocks, which outperformed their growth and large-cap counterparts respectively during the month.
• Within the Portfolio, the top performer was the Dimensional Pacific Basin Small Companies Fund, which delivered 1.4%. The Fund’s performance was driven by its overweight to Japan small-cap stocks, which saw resilient performance during the month. The weakest performer was the Amundi Core MSCI Emerging Markets Fund. The Fund, which passively tracks the emerging market equities index, had a challenging month delivering a negative 2.9%, as emerging market stocks struggled in November after delivering robust performance the past few months. Specifically, AI-beneficiary stocks in China, Korea and Taiwan declined and weighed on performance.

The 100% Fixed Income Portfolio gained 0.1% in November, slightly outperforming the broader fixed income market which delivered flat performance.

• November started with increased uncertainty around the Fed’s monetary policy path from mixed unemployment data. However, a subsequent increase in conviction of a Fed rate cut in December and higher volatility in equities provided some support for global bonds. Overall, global bonds ended the month with flat returns.
• The Flagship 100% Fixed Income Portfolio slightly outperformed the broader fixed income market due to the effective duration management of some of the active fixed income funds within the Portfolio.
• Within the Portfolio, the PIMCO Income Fund was the strongest performer in November, delivering 0.5%. The Fund’s long exposure to US duration benefitted from the decline in US yields during the month. The iShares Emerging Markets Government Bond Index Fund was the weakest performer, ending the month down 0.1%. While emerging market bonds saw moderate performance in November, the Fund’s performance was weighed down by USD depreciation against SGD as its underlying USD denominated bonds are not SGD hedged.

Endowus Core-Flagship CPF Portfolio

The 100% Equity Portfolio declined by 0.4% in November, underperforming the global equity benchmark by 0.1%

• The Flagship CPF 100% Equity Portfolio underperformed its benchmark in November due to its overweight to emerging market equities, which underperformed their developed market counterparts.
• Within the Portfolio, the Dimensional Global Core Equity III Fund ended the month up 0.9% and was the strongest performing fund. The Fund’s tilt towards value and small cap stocks were drivers of outperformance. On the other hand, the Schroder Global Emerging Markets Opportunities Fund was the weakest performer, ending the month down 3.1% as emerging market equities struggled in November.

The 100% Fixed Income Portfolio was down 0.1% in November, slightly underperforming the broader fixed income market.

• The Flagship CPF 100% Fixed Income portfolio’s performance was dragged down by its overweight to Singapore bonds. While Singapore bonds have performed well this year, it continues to lose traction in November, paring back previous gains.
• Within the portfolio, the United SGD Fund ended the month with flat performance and was the best performing fund. On the other hand, the Eastspring Singapore Select Bond Fund was the weakest performer, ending the month down 0.8% as Singapore bonds struggled during the month.

Endowus Income Portfolios

The Stable Income Portfolio delivered 0.3% return in November, outperforming the broader credit market. 

• All flexible income funds contributed to relative outperformance in November. PIMCO GIS Income Fund returned 0.5% and was the top performer. Its US duration exposure and exposure in select emerging markets foreign exchange contributed to performance. The dispersion in returns among flexible income funds was small, with the other three funds returning around 0.4% in the month. 
• The Portfolio’s allocation to Asian bond funds and short duration emerging markets bond fund detracted slightly from relative performance. 

The Higher Income Portfolio delivered 0.2% in November, outperforming the 20-80 benchmark. 

• The fixed income portion of the Portfolio performed in line with the overall credit market. Performance contribution from the flexible income funds was offset by the underperformance that came from the Portfolio’s allocation to more risk-on assets such as Asian, Emerging Markets and high yield bonds. 
• The equity portion of the Portfolio outperformed the global equity market. The Portfolio’s tilt to value and high dividend stocks contributed to the outperformance. This was partially offset by its overweight to Emerging Market equities which struggled in November. 

The Future Income Portfolio gained 0.2% in November, outperforming the 40-60 benchmark. 

• Its fixed income component outperformed the broader credit market with reasons similar to those of Stable Income.
• The equity portion outperformed the global equity market due to its tilt towards small cap and quality stocks, and its slight overweight to European equities.

Latest current target payout update:

In September, we revised downwards the current target payout of Higher Income Portfolio to 5-6%. The recent increase in hedging cost between SGD and USD pair has caused certain fund managers to lower the payout, impacting the overall payout levels across all three income portfolios. This in particular has caused Higher Income Portfolio’s payout yield to dip below the prior target payout range. In light of the prevailing interest rate cycle, it is only prudent to lower the current target payout range of the Higher Income Portfolio. 

Investment grade flexible income funds continue to be able to generate income that’s akin to high yield funds in the current environment where high yield spreads are particularly tight. In light of this, we are comfortable with the Higher Income Portfolio generating an income level that is similar to that of Stable Income. It is important to note that the Higher Income Portfolio has delivered better growth in terms of total return than Stable Income, with the prudent addition of credit and equity risk. This means that after receiving the income, investors in the Higher Income Portfolio would have seen a stronger increase in their capital year-to-date. 

We are monitoring and will take actions to improve the portfolios if we believe there are better building blocks/ is room to optimise the portfolios further. 

Endowus Cash Smart Portfolios

Cash Smart Secure continued to generate stable and positive returns in November. 

• The Cash Smart Secure Portfolio maintained its stable return profile, posting a 0.1% gain in November. 
• Both the underlying funds, the Fullerton SGD Cash Fund and the LionGlobal SGD Enhanced Liquidity Fund, returned 0.1% respectively. 

Cash Smart Enhanced continued to provide stable returns in November.

• Cash Smart Enhanced generated a return of 0.1% during the month.
• The two cash and money market funds, Fullerton SGD Cash Fund and LionGlobal SGD Enhanced Liquidity Fund, both gained 0.1%. The United SGD Fund ended the month with flat performance, posing a slight drag on overall portfolio performance.

Cash Smart Ultra generated positive returns in November, though it did not perform according to its risk level.

• Cash Smart Ultra delivered a return of 0.1% in November.
• Most of the short-duration bond funds in the Portfolio experienced muted performance in November. As such, despite having the longest duration amongst the Cash Smart Portfolios, Cash Smart Ultra performed below expectations according to its risk level.
• The best performing fund was the PIMCO Low Duration Income Fund, which returned 0.3%, as it benefitted from its exposure to US securitised bonds that have a higher yield. 

Please note: There has been a change in the benchmark due to the discontinuation of the 3-month SIBOR. The new benchmarks feature higher returns than SIBOR, but our Cash Smart Portfolios have tended to outperform them across various periods.