Key takeaways

The Endowus Cash Smart solutions are generating better-than-expected results driven by both yield and returns.

  • We are revising the projected net yields for Endowus Cash Smart portfolios. Cash Smart Core  goes to 0.8% ~ 0.9%, and Enhanced to 1.2% ~ 1.4%.
  • Projected yields are indicative and conservative projections of just the yield. The outcomes have consistently been better than projections since launch.
  • Endowus Cash Smart portfolios remain attractive cash management options in a continuous low yield environment.  They are also defensive against recent concerns of increasing Treasury yield.

How has Endowus Cash Smart performed since launch?

Endowus Cash Smart Portfolio Performance, 1 July 2020 to 28 February 2021

Growth of 100 chart. Source: Endowus Research, Bloomberg

As you can see from the above chart, the performance of Endowus Cash Smart products have been steady and strong since their launch on 1 July 2020.  We also launched Cash Management (Ultra) with a projected yield of 1.7% to 1.9%  on 6 January 2021, which can be created on Endowus Fund Smart platform. Since launch, all of the Endowus Cash Smart solutions, including Ultra, have  delivered higher returns than originally projected.  The table below shows the monthly and overall performance of the three portfolios and underlying funds since their respective launches.  Actual net returns since launch and annualised rates of return are in line or higher than the projected yield numbers we shared with our clients at the time of launch.

Endowus Cash Smart has performed better than the projected yield at the time of launch

Monthly simple returns of different Cash Mgmt products/funds
Monthly annualised returns of different Cash Mgmt products/funds Source: Endowus Research, Bloomberg. All performance numbers are to 28 February 2021. Performance for Cash Management (Ultra) starts from 6 January 2021, the launch date of the portfolio. Returns shown are net of fund level fees, trailer fee rebate, and Endowus access fee.

Cash Smart Core performed in line with the projected yield and Cash Smart Enhanced did better than the projected yield at the time of launch. Enhanced had more pronounced returns because the solution includes a short duration fixed income fund with higher duration exposure.  In this low interest rate environment, to get higher yield, investors have to take on higher duration or credit risk. It is always important to balance the risk and reward, and we believe the improvement in yield outweighs the risks for the Enhanced solution.


We have highlighted the maximum drawdown risk of the Enhanced product compared to Core and why the yield on Enhanced is higher. It is about efficiency; there is a slightly higher risk for Enhanced and that has resulted in a boost in returns. The returns have surely outweighed the risk in this case.

Projected yields are just projections

There have been a slew of cash management products on the market with different projected yields. Some have been touting higher projected yields and most of the other Robo-advisors are subsidizing yields by giving up to 0.3% of rebates paid out by the company to try to make these artificial  yield numbers look more attractive. If markets shift in the wrong direction, investors in these products may be surprised when these robo-advisors arbitrarily remove their rebates and leave them with a sub-optimal product without warning.

While having more choice is normally a good thing, the fixation on these minor differences in yield are a concern. Especially when some competitors are effectively cheating by showing artificially higher yield by subsidising themselves and not actually generating the claimed yield/return from the underlying investment products. Also, it is important to note that the most recent releases have included much more heavy exposure to short duration fixed income products which carry more risk inefficiently - both credit risk and duration risk - in order to achieve that marginally higher yield.

Source: Endowus, Stashaway and GrabInvest. Based on published launch and updates given by different providers. Endowus projected net yield is based on the mid-value of the yield range provided by Endowus.

We believe the differences between these products are very minor and investors are getting too fixated on chasing the higher headline yields in the short term. In reality, yields are just indicative numbers, and what matters even more is the ability of the product provider to be transparent and then deliver what they promise.  

In addition, offerings such as Grab Invest and Stashaway Simple have seen dramatic revisions in rates,  which could be attributed to slower updates or subsidising  the yield, Endowus has always espoused a transparent and conservative approach to providing projected yield information, including providing a realistic range of yields, and never subsidising or padding our numbers, providing only organically achievable underlying investment yields. With Endowus, you know that the Cash Smart range of products will be the best-in-class cash management products that will best balance risk and reward to generate good yields while not taking excessive risk.

Better actual numbers driven by both yield and returns

Since the launch of  the Cash Smart portfolios, we have revised the yields almost on a monthly basis. In fact, we have led the industry practice in showing and regularly updating the projected yields. However, it is important to note that we have always erred on the side of caution by providing a conservative estimate of the projected yield. We have also provided a range instead of a fixed number to accurately reflect the reality that the yields will continue to fluctuate with rising or falling interest rate environments.

The result is that Endowus Cash Smart portfolios have consistently delivered higher returns than historical projected yields. The below charts illustrate the point by comparing the actual annualised returns of Cash Smart Core and Enhanced portfolios to the historical projected yields. Over the past 5 periods in which revisions of projected yields were made, the portfolios have generated actual returns either within the range or well above the projected yield range on all occasions.

Cash Smart Core : Projected and actual annualised yields

Source: Endowus research, Bloomberg. Data as of 28 February 2021. Cash Smart Core and Enhanced were launched on July 1, 2020.

The more recently launched Cash Management (Ultra) portfolio also significantly outperformed the projected yield range at the time of launch. This is because while yields continued to drop over the past few months, the drop in yield was accompanied by capital appreciation, especially in short duration bond funds. The resulting outcome is that annualised returns are more than double the projected yield. Historical returns are not an indicator of future returns, but in the space of short duration bonds and money market instruments, it is possible to have a much higher level of visibility on yield to maturity and returns outlook.

Cash Management (Ultra) : Projected and actual annualised yields

Source: Endowus research, Bloomberg. Data as of Feb 28, 2021.Returns shown are net of fund level fees, trailer fee rebate, and Endowus access fee.

Cash Smart portfolios are defensive even when yields rise

There might be some concerns from investors on the recent spike in the treasury yield. Over the past week or so, the US treasury yields have risen due to expectations of reflation. However, the short end of the curve is still anchored at a low level, and the Fed has assured that it will not reverse its loose monetary stance in the foreseeable future.

Endowus Cash Smart portfolios are defensive in such an environment due to their focus on money market instruments or the short-end of the yield curve with only low duration exposure. A fixed income portfolio’s duration measures how much the portfolio’s price will drop when interest rate goes up. Endowus Cash Smart portfolios’ underlying funds are prudently managed to suit short term liquidity needs by having very limited duration exposure. This is another reason why we are concerned about some of our competitors’ recent launches which seem to be taking more duration risk and may be affected by the pick up in yield at the longer end of the yield curve.

Endowus Cash Smart portfolios remain attractive

Major interest rates and deposit rates keep heading lower

Source: Endowus Research, Bloomberg

As shown by the above chart,  interest rates collapsed globally in March 2020 and have continued to fall in the subsequent months. Currently, whether it is SIBOR, government bills, savings accounts, Singapore Savings Bonds or bank fixed deposits - all are well below 1% and remain significantly lower than what you can get from the Endowus Cash Smart solutions.

Further, with the traditional savings method, such as bank fixed deposits, investors’ money is locked up and you only get to see the interest and the money after 12 months. If for whatever reason you need to access the money and cancel the fixed deposit, you lose all the interest earned thus far. In comparison, Endowus Cash Smart allows accrual of returns on a daily basis, with no lock-ups.

The below chart shows a comparison of the latest Cash Smart yields with those of several fixed deposit options.  Even with the latest revised lower yields, Endowus Cash Smart Core and Enhanced remain extremely attractive alternatives for short term liquidity management.

Comparison of Endowus Cash Smart projected yields with deposits

Source: Endowus Research, MAS, DBS

Giving access to information and yield transparently

We cannot make a prediction on the future direction of interest rates. However, we will continue to revise down or up whenever the net yield moves, and to come up with innovative solutions to meet our clients’ needs.  Endowus receives weekly updates from our partner fund managers and will update any changes, but often these changes are marginal.  If there is a meaningful shift in yield, we will continue to make those changes to accurately reflect projected yields and provide an update on a regular basis.

In addition, we are in constant search for better fund options and better ways to serve our clients; we will continue to focus on providing robust advice to the best interest of our clients with the highest degree of integrity and transparency.

Cash Smart underlying funds' monthly gross projected yields

Source: Endowus Research, Bloomberg

If you have any other questions or need advice from one of our MAS-licensed representatives, please reach out at support@endowus.com or visit our Cash Smart landing page here. If you would like to do more research on the Cash Smart products, please find the in-depth Endowus Investment Office research Insights article here.


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