Getting started with Endowus Flagship Portfolios

Setting the stage for 2022

2022 continued on from where 2021 left off — an increase in market volatility and persistent concerns about the macro environment dominating headlines. There are ongoing market concerns around the pace of central banks' rate hikes needed to combat inflation. With Russia’s invasion of Ukraine in late-February, volatility spiked to a 12-month high in March. Energy and commodity prices continue to stay elevated, bringing to the fore greater risk of stagflation. Investors will watch for the effect that sanctions in Russia will have on the global economy.

What are Endowus' Flagship Portfolios?

Endowus’ Flagship Portfolios are designed to give investors broad exposure to global markets in a strategic and passive asset allocation. This is opposed to a tactical — or short-term and opportunistic — allocation. It is also unlike an active allocation that most of our competitors espouse. Our allocation strategy means that we largely track the global indices over time.

Why should investors start with Flagship Portfolios?

Most investors should start with an allocation to the Endowus core strategies through our Flagship passive Portfolios. At Endowus, all core portfolios are globally diversified, have a strategic passive asset allocation, and are low-cost in nature to take advantage of the broad market opportunities, and generate long-term compounding returns.

Endowus’ Strategic Passive Asset Allocation (SPAA) framework is:

• Strategic top-down, meaning the allocation to different asset classes such as equities, fixed income, geography, style or factors, are set based on the goal of the portfolio 
• Passive in implementation, meaning Endowus does not believe in tactically or actively changing your allocations based on market conditions or economic indicators
• Curation of portfolio design bottom-up, meaning Endowus carefully selects best-in-class funds to best represent your goal’s SPAA. We access leading global fund managers with the expertise, scale, and a low-cost structure. They have real, proven track records in implementing their strategies with tens and hundreds of billions of assets successfully over time. These strategies can be passive, systematic or active, depending on the asset class they try to represent, and the investment objective.

We assess the portfolio construction of Flagship Portfolios by ticking these boxes:

• The portfolio should be passively indexed to broad markets. This is not just confined to the broad Singapore market or even the broad China or US market. The exposure is to globally diversified broad markets for each asset class.
• The portfolio should be passive in asset allocation — so it should not be taking active bets in countries, sectors, asset classes at a whim. Based on empirical evidence, the probability of active strategies missing the returns you would get from a passive market allocation is, in fact, high.
• There must be a low-cost solution that gives the highest chance of success to the investment strategy. Lower cost immediately enhances returns without any change in the risk profile of the portfolio. Endowus accesses institutional funds that are lower cost and higher quality, or fully rebates all trailer fees or any commission we receive.

How did the Flagship Portfolios perform in 2021?

The Endowus core Flagship Cash/SRS Equities Portfolios ended 2021 with strong performance, outperforming the MSCI ACWI as it especially benefited from factor rotations into value and small companies during the year.

We continue to hold our conviction that factor tilts towards the long-term proven drivers of return, such as value, small cap, and profitability, will drive excess returns in the long run.

On the fixed income side, our portfolios also performed well compared to major market benchmarks for the full year of 2021. It was more defensive in a generally negative and uncertain environment for the fixed income market.

Many active management options that have shown short-term outperformance also significantly underperformed the passive benchmark returns.

Flagship 100% Equity Portfolio as of March 2022

Amid ongoing market volatility, the Endowus Flagship 100% Equity Portfolio, with its passive strategy, has been resilient when compared against the broader market (MSCI ACWI) and other market indices (such as the S&P 500). The chart below shows its performance as of 18 March, 2022.

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Here's how other key Endowus Portfolios have performed (as of mid-March 2022).

How do Endowus’ Flagship Portfolios stack up against the competition?

Based on these publicly-available comparisons, other digital wealth players have consistently underperformed throughout 2021. Not only has the Endowus Flagship equities portfolio outperformed its peers, it's important to note that Endowus is the only one that managed to beat the global index — the MSCI ACWI — while the others lagged significantly. The chart below shows graphically how this Endowus Flagship Portfolio has largely tracked and outperformed ACWI and versus the others.

The more pertinent issue has been the significantly higher volatility and low hit rate of the other robo-advisors’ performances, especially when they promise an all-weather, lower volatility investment approach. We’ve written about how not all robo-advisors are created the same. 

Endowus generated just 3 months of negative returns in 2021, with one of those months recording a 0.02% fall. That contrasts with performance from the competitors that showed 5 or 6 months of negative returns. In one case, a negative return was recorded for the full year — the same year the market was up more than 20%. 

Investing should be made simple, for everyone. Endowus has helped to level the playing field for retail investors, so all of us can have a fair shot at improving their finances, without losing sleep. Endowus Flagship Portfolios are where you can begin to build your investing journey, and allow your returns to compound over time. Get more details about the Flagship Portfolios here. For more Insights on our 2021 performance, click here.
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Investment involves risk. Past performance is not necessarily a guide to future performance or returns. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endow.us Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

Investment into collective investment schemes: Please refer to respective funds’ prospectuses for details of the funds, their related fees, charges and risk factors, The listing of units of the fund on a stock exchange does not guarantee a liquid market for the units. Before making an investment decision, you are reminded to refer to the relevant prospectus for specific risk considerations.

For Cash Smart Secure, Cash Smart Enhanced, Cash Smart Ultra: It is not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested. Investment products are not insured products under the provisions of the Deposit Insurance and Policy Owners Protection Schemes Act 2011 of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme. Interest rates are indicative and subject to change at any time.

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