Getting started with Endowus Flagship Portfolios
Endowus Insights

Getting started with Endowus Flagship Portfolios

Updated
July 4, 2022
published
March 25, 2022
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  • In 2021, Endowus Flagship Portfolios fared well against benchmark indices, and outperformed similar portfolios offered by our competitors 
  • Flagship Cash/SRS equities delivered +22.3% in returns in 2021 
  • Flagship CPF equities posted a +17.0% return in 2021

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.

Endowus Flagship Cash/SRS Portfolios performance
Endowus Flagship CPF Portfolios performance

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.

Endowus Flagship 100% Equity portfolio outperformed the market

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%. 

Endowus vs Other Robos and Benchmark Indices
Endowus Portfolio Performance vs Other Robos & Benchmark

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.

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