Deep Dive: Endowus Technology Portfolio

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The article was first published in 2021 at the launch of Endowus Satellite Portfolios and was updated on 21 November 2024, following recommended portfolio changes to Endowus Satellite Portfolio - Technology. The RPC is part of Endowus’ commitment to source funds that will optimise your portfolios.  Find out more about the portfolio enhancements.

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The Endowus Technology Portfolio is designed to give access to the most innovative companies globally that benefit from the advancement and application of technology. The idiosyncratic or non-systematic returns that is achievable from the Technology sector is high and has traditionally been a high source of alpha for investors, despite its high volatility. It sets itself apart from other traditional technology portfolios in the industry or buying a single technology fund as it provides more systematic diversification benefits.

We have gone through a rigorous due diligence process whereby we screened for all the Technology funds in the universe available for Singapore working with the leading experts in Technology investing. We have selected six best-in-class funds to be the building blocks of the Technology Portfolio.

What are the underlying funds in the Endowus Technology Portfolio?

We have selected six best-in-class funds focused on technology and innovation, managed by four globally renowned fund houses — BlackRock, Fidelity, and Franklin Templeton. The funds were chosen for their strong, benchmark-beating performance, as well as for their unique respective investment focuses (as summarised above). Collectively, the funds provide investors an diversified and optimised exposure to technology investing.

We work with these global leaders in technology investing to achieve the lowest way to access high-quality funds. Often accessing institutional share classes or 100% rebating of trailer fees to achieve a lower net fee. We also have worked to bring in and introduce new funds or share classes of funds on the Endowus platform, which means that some of these funds can be exclusively accessible through the Endowus platform. We endeavour to continue to partner with major global and local fund managers to improve on the access to best-in-class funds at the lowest cost achievable.

Active management by top fund managers to generate higher returns with lower risk

Given the vast investment universe for technology and tech-related equities, as well as the complexity of understanding the impact of technology on their business models, we think that technology investing can be most efficiently done by leveraging the expertise of reputable fund managers to extract alpha through their unique investment approaches.

The Portfolio has been constructed to benefit from the collective wisdom of the underlying funds to generate high returns through exposure to a diverse basket of companies, and this has proven to be successful historically compared to the market:

Why invest in the Endowus Technology Satellite Portfolio?

Diverse portfolio with attractive historical performance

The Endowus Technology Portfolio is well- across various sizes and geographies. This is by deliberate design in an attempt to smoothen out volatility in the long term, while making sure that the portfolio is still invested in the best ideas of technology investing. 

Additionally, tapping into the expertise of different managers also helps to identify the best ideas in technology through various ways. We have worked with fund managers who individually specialise in these various approaches to technology investing — be it large-cap, small-cap or private, or US-centric or more global.

In all, the portfolio has exhibited attractive historical performance*, as we will discuss below.

(*Past performance is not an indicator nor a guarantee of future performance or returns.)

Provides attractive risk-adjusted returns for technology investors

The Portfolio is believed to deliver attractive risk-adjusted returns in the long term, driven by the growth of large, established technology leaders, as well as the upside of incumbent industry players.

Moreover, the quality of a fund's process and management team holds significant importance, extending beyond mere performance. We also maintain a steadfast belief in these funds’ capacity to outperform over the longer term, driven by active allocations across technology themes and equities.

It is also important to note the difference in the drivers of return for the portfolio compared to the broader market – as the broader market index heavily features US-based mega-cap stocks, they will outperform in periods where such stocks are favoured by investors. The Endowus Global Technology Portfolio features a more diverse set of technology stocks across regions and sizes and represents a differentiated trajectory from the broader market index.

Ongoing assessment of underlying funds by Endowus Investment Office

The underlying funds in the Portfolio have been selected based on the rigorous assessment by the Endowus Investment Office for their superior quantitative and qualitative characteristics, and are believed to be the best-in-class among their peers that are available to retail investors in Singapore today. However, we recognise that the technology sector is constantly evolving, giving rise to new ideas and funds that effectively capture them. To make sure that the Portfolio reflects the best opportunities in technology investing,  we conduct ongoing re-assessments of the underlying funds to ensure that their superior characteristics are maintained into the future, and where needed, to introduce new funds to supplement or replace the existing portfolio design.

Learn more about how you should approach a Core-Satellite Portfolio investment strategy here.