Highlights from the Endowus WealthTech Conference 2024

Views from CIOs: Should I be concerned about market volatility?

Moderated by: Samuel Rhee, Chairman & Chief Investment Officer, Endowus

Anubhuti Gupta, CFA, Board Member, CFA Society Singapore

Chunyen Liu, Chief Investment Officer, AIA Singapore

Manraj Sekhon, Chief Investment Officer, Templeton Global Investments

• No one can call the market precisely – the world anticipated four rate cuts this year, but the first rate cut only happened in September. Hence, it’s important to allocate investment portfolios with a long-term view, and fund managers that are nimble and flexible.
• Rates have started to come down, but it is unlikely to go back to levels as low as the last decade. Fixed income has become more attractive, but the macro environment still remains favourable for equities with anticipations of a soft landing.
• We are in an extended cycle where returns in the past few years have been very concentrated in a small number of stocks in the US. While the US remains an important economy, emerging markets offer pockets of opportunities and should not be overlooked.
• Recent stimulus policy in China may not be enough to revive the natural mechanics of the economy. Where there are still political and socioeconomic transitions going on, certain sectors will not be supported like before, and it is difficult for entrepreneurs to continue doing what they have been doing before.

From policy to portfolio: Is macro driving everything?

Moderated by: Hugh Chung, Chief Investment Advisory Officer, Endowus

Ben Charoenwong, Associate Professor of Finance, Insead

David Chao, Global Market Strategist, Invesco

Navin Saigal, Head of Fundamental Fixed Income, Asia Pacific, BlackRock

• It is hard to tell if we have won the battle against recession based on month-to-month data. Even among the Fed officials, there is a dispersion of opinions. What we know is that the US economy in the past few years has been very resilient.
• There are huge implications of the high federal debt in the US. The amount is one issue, but what the money is being spent on is equally, if not more, important. The ways to grow out of a deficit may be a tech revolution and productivity growth.
• We could be in a situation where we need to think about what the neutral rate is going to be, which is neither restricting nor expansionary. During the past 10 years, interest rates were low, meaning capital costs were generally low. Now with higher rates, we need to think about which classes or sectors will do well in this environment.
• The US is still the largest economy and trading partner. Many countries have reserves in USD, but it makes sense to diversify it – whether the US is in a productivity boom, or actually on an unsustainable trajectory, we can’t tell where things will head towards.
• China has a lot of trade that is mostly done in USD. Gold and equities used to have a negative correlation but that changed with Covid-19. Now, gold is seen as a risk asset that goes up with stocks, as well as a diversifier. Central banks in Russia and China are buying gold, and more demand for gold might mean that investors want to diversify away from holding USD.

Multi-asset strategies: Which asset class will outperform?

Moderated by: Yulin Liu, Investment Lead, Endowus

Alexis Lavergne, Fixed Income Investment Specialist, Janus Henderson Investors

Marcio Bogoricin, Executive Vice President and Head of Global Wealth Management Asia ex-Japan, PIMCO

Paul Schneider, Executive Director, Multi-Asset Solutions Portfolio Manager, Goldman Sachs

• Bond prices today are already priced in on market expectations of future rate cuts, but buying bonds now will allow investors to lock in higher yields and potential capital appreciation. Investing in money market funds and short duration credit has good risk-adjusted returns, but there is reinvestment risk.
• A PIMCO study compared the returns of an index for investors who stayed invested and those who try to time – the gap between both groups is 1.8% a year.
• On SWAN (“sleep well at night”) investing: 40-year returns of different portfolios were found to be within a very close range. However active an investor may want to be, it is very difficult to consistently outperform the markets. It is consistency, combined with time, that leads to a higher probability of positive returns.
• Tactical asset allocation sits between strategic asset allocation and speculation. The latter is when investors invest a pot of money for long-term goals, which can be “boring”. Hence, tactical asset allocation keeps investors engaged with the markets, but investors should be aware of the risks that come with it.
• The US economy has slowed down but it is not stalling. Tech stocks, especially artificial intelligence (AI), still look positive, including sectors that are enabling AI and the tools built around it. Asia equities could also potentially benefit from AI.
• It is still an unclear debate on whether cryptocurrency has intrinsic value – there are many considerations in the underlying market and what is driving performance, but for cryptocurrency, there is only the price to look at. 

The most common investment mistakes and how to avoid them

Moderated by: Sin Ting So, Chief Client Officer, Endowus

Gerald Wong, Founder & CEO, Beansprout

Pinn Lawjindakul, Partner, Lightspeed Venture Partners

Serena Wong, Author, Why Women Don't Talk About Money

Timothy Ho, Co-founder, Managing Editor, Dollars & Sense

• The young often take on too much risk, while those close to retirement don’t take enough risk. Bitcoins and single stocks trading are popular among the young, and even though they have a longer time horizon, it is still good to look at different asset classes to manage risks. The latter still has a considerable runway when we look at life expectancy in Singapore, which leaves room for bonds to be considered.
• Investment products are more accessible than ever, which is a challenge for investors to discern among different information sources. This highlights the importance of educating ourselves to decide the best way forward.
• Investing requires patience, and it is likened to growing a plant – sunlight is the market that you can’t control, and you need to water the plant consistently for it to grow well.
• Narratives around money come from unconscious biases in our upbringing. We observe that in Asian families where men generally take more risks, while women are taught to be obedient. Women tend to be very good at saving, but doing so alone won’t meet their financial goals, even if it is just to beat inflation. Parents need to be very cognizant of the way they talk to children about money.

A frank conversation with family office principals & CIOs

Moderated by: Samuel Rhee, Chairman & Chief Investment Officer, Endowus

Kelvin Tay, Chief Investment Officer, UBS Global Wealth Management

Lynn Hermijanto, Founder, TH3 Capital

Nicolas Tabardel, Investment Manager, ANB Investment

You Ning Sun, Managing Director, Pacific Eagle Real Estate (PERE)

• The next crisis is not going to be like the last one. Diversification is about being humble – one cannot prepare for everything without diversification. 
• In constructing portfolios, public markets are still the cornerstone, while private markets are a key part of the arsenal. To take the endowment investment route, the key to all this is financial literacy. There’s a real need to learn from the markets and offerings and importantly from the people, including those in the ecosystem. 
• Legacy encompasses how an individual and a family will be remembered and the lasting impact your choices have on those who remain. Legacy provides clarity on the role of capital in our lives and is a crucial aspect of portfolio construction. 
• It is important to have clarity as to why you need and want a family office, and what the end goals are. The decisions we make today shape our future and determine our true measure of success – whether the family office is solely focused on personal gains, or whether with the wealth we aspire to leave a meaningful mark on humanity.

Does private credit run still have legs? Can private equity come back?

Moderated by: Hugh Chung, Chief Investment Advisory Officer, Endowus

Gabriel Ng, Managing Director, Private Equity, Neuberger Berman

Tracy Lau, Managing Director, Carlyle

Sim Jian Hong, Director, Private Equity, SeaTown

Timothy Lee, Head of Business Management & Operations APAC and Managing Director, iCapital

• For long-term investing, base rates, or risk-free rates, should not impact credit portfolio construction. The premium above cash, or the reward of taking credit and illiquidity risk, is about 400-500 basis points above the 4% base rate right now. Default risk is though in focus at present. 
• Distributions to paid-in (DPI), or the new internal rate of return, become relevant nowadays, with higher interest rates and slower IPO activities. For limited partners, the ability to reinvest in future vintages underscores the importance of distributions. The secondary market, the sale of minority stakes to take chips off the table, as well as fund-to-fund transfers, emerge as crucial tools.
• Over to the private equity side, value creation opportunities abound across ASEAN. Family-backed enterprises in this part of the world also welcome guidance from private equity funds to help ramp them up towards widely adopted standards of corporate governance and operational excellence. 
• A valuation mismatch remains between company founders and investors who are not willing to pay up the multiples. As the backdrop normalises for a higher-for-longer interest rate, both sides of the deal table will inch closer to meeting in the middle, which hopefully will encourage more deal activities. 
• In rolling out more private market solutions to individual investors, education remains key - from augmenting the understanding of various asset classes and their investment horizons, as well as, the pros and cons of the semi-liquid, or evergreen vehicles. 

‍Learn about our Endowus Private Wealth solutions, or opt-in as a professional investor today. 

Unlocking potential: Liquid alternatives in your portfolio

Moderated by: Ludovic de Pampelonne, Investment Lead, Endowus

Francis Wong, Managing Director, UBP Asset Management Asia

Michael Dyer, CFA, CAIA, Investment Director, M&G Investments

Zach Yeo, Head of Sales, South East Asia, Jupiter Asset Management

• Liquidity is a personal choice and the value of liquidity in a portfolio comes down to one’s spending needs and the flexibility required to access your funds. Before allocating to any alternative solutions, or any asset classes for that matter, consider your expected time horizon and how long you are comfortable locking up your money. 
• For new investors in alts, gather information on the manager’s historical performance, volatility, and drawdown history to assess their resilience and adaptability. Also, consider the manager's ability to adjust leverage, which indicates their risk management capabilities during market downturns. It is important to go beyond relying solely on backtesting, as it may not fully capture the complexities and nuances of real-time market dynamics.
• Investors should familiarise the components of liquidity, including terms and conditions with regulated UCITS hedge funds with daily liquidity, such as redemption requirements and gate provisions.

‍Read more about Endowus Core Enhanced: Liquid alts in core allocation

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