NEW: Enhancements to Endowus Cash Smart
Endowus Insights

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NEW: Enhancements to Endowus Cash Smart

Mar 2024
Nov 2023
  • Our latest recommended portfolio change improves the Cash Smart Enhanced and Ultra portfolios by increasing their allocations to relatively more conservative, shorter-duration sectors, while improving fund manager diversification and lowering portfolio-level fees.
  • Watch our webinar to learn more about the recommended portfolio change. To start investing your short-term cash with Endowus, click here.

In our latest recommended portfolio change (RPC), Endowus is updating the fund allocations to both the Cash Smart Enhanced and Cash Smart Ultra Portfolios.

These changes, if accepted, will lower the portfolio-level fees, and reduce exposure to relatively riskier sectors while keeping to similar levels of yields.

Clients can choose to accept or reject the recommended changes.

Key improvements to Endowus Cash Smart Enhanced & Ultra

Lower fees

The new Cash Smart Enhanced and Ultra Portfolios will be cheaper by 0.02% and 0.04% per annum. 

The compounded impact of fees on your returns is particularly important for money market funds and short-duration fixed income funds that are characterised by a relatively lower level of average returns compared to other riskier asset classes.

Reduced exposure to more volatile sectors

The adjustments for Cash Smart Enhanced and Ultra portfolios aim to overall reduce the volatility of the portfolio by:

  1. Increasing their allocations to more conservative, shorter duration sectors and;
  2. Improve diversification across fund managers 

Cash Smart Enhanced

Notably, the Enhanced portfolio has an increased allocation to “cash” instruments, including bank deposits and other highly liquid money market instruments. This lowers the overall duration (measure of sensitivity to changes in the interest rate) of the portfolio. We have also added more funds managed by other fund managers to increase manager diversification in order to mitigate some of the potential risks associated with manager concentration.

Cash Smart Ultra

We have decided to significantly decrease Ultra’s exposure to shorter term bond funds and instead, increase allocations to cash allocation (i.e. bank deposits and other highly liquid money market instruments), as well as bond funds with a duration range of about 1 year. 

In this latest update, the removal of Nikko Shenton Income Fund will result in sizable reductions to more volatile sectors, such as the property and real estate sector in China. 

Maintaining current level of attractive yield

Despite the shift towards de-risking and a higher allocation to cash assets, the portfolios’ current yield levels remain competitive, in this environment.

This persistence is largely attributed to the elevated levels of base rates for SGD and USD, which are the primary exposures in the Cash Smart portfolios. However, during periods of exceptionally low yields such as in 2021, the new portfolios would also naturally demonstrate lower levels of yield.

Historical performance comparison

Comparing the performance of the current Cash Smart Enhanced portfolio and the new portfolio, we note that there are minor differences in total returns, historical maximum drawdown, and the duration of recovery from such drawdowns. The proposed changes will not significantly alter the investment objectives and overall performance of the Cash Smart Enhanced portfolio, while still benefiting from increased manager diversification and a reduction in overall duration.

As for the Cash Smart Ultra portfolio, the proposed changes could result in lower drawdown if the environment should turn adverse again, because of the shorter duration and the more conservative holdings.  

Additionally, because of the shorter duration, the portfolio will be less sensitive to changes in interest rates, resulting in a more robust portfolio.

Portfolio characteristics

Let's take a moment to recap the distinctive features of the Endowus Cash Smart Portfolio suite, tailored to suit the diverse cash management needs of investors. It is crucial to consider your risk appetite when selecting from the three portfolios, each offering a distinct risk/return profile based on your short-term investment horizon.

Starting with Cash Smart Secure, the allocations to cash, money market, and ultra short-duration bond instruments can help lower portfolio volatility. The portfolio may experience occasional small losses, which should be quickly recovered within a short period. This makes Secure a conservative option for those looking to invest their extra cash that they may need to access in the short-term.

Cash Smart Enhanced combines the two funds in the Secure portfolio, and extends the portfolio-level duration by introducing a low-duration fixed income fund that primarily invests in high-quality securities issued by global entities. While it has the potential for greater capital appreciation than Secure, it may experience slightly wider losses during market turbulence, making it more suitable for investors with idle cash that they have no immediate need for to gain potentially higher returns, at a slightly higher volatility.

Finally, Cash Smart Ultra amalgamates the features of Enhanced with three additional short-duration fixed income and securitised funds, providing an even higher potential for returns over Enhanced, alongside an increased level of risk.

A guide to accepting the recommended portfolio change

When the RPC is initiated, you can opt for the change via either one of these methods:

  • Click on the Login button directly from the RPC email you would have received
  • Click on the notification bell on the Dashboard
  • Alternatively, click on the relevant page under the My Goals section, then select “View the Recommended Portfolio Change” under Goal Settings

The platform will take you through a comparison of the existing portfolio allocation and the updated portfolio allocation.

Choose to accept or reject the recommendation. If you reject the recommendation but subsequently change your mind, you can always come back to modify your choice via the Goal Settings button.

Once the recommendation is accepted, the portfolio will be rebalanced. The units of the old share class or classes will be sold. Proceeds from the redemption sale will then be used to buy units in the updated share class or classes.

As a value-added service from Endowus, we will also take the opportunity to rebalance your portfolio in a holistic way, back to its target asset allocation. This will be done even if the usual 15% deviation threshold is not breached.

Clients may also accept the RPC by clicking on the Login button from the RPC alert email.

The entire process will take about 5 to 10 business days to complete. You may continue to invest in and partially redeem funds from the portfolio during rebalancing. However, a full redemption cannot be performed until the rebalancing process is completed.

Enjoy lower fees, stronger long-term gains with Endowus

The Endowus Investment Office is constantly monitoring your advised portfolios and searching for new options that will improve these portfolios. Opt in for the recommended portfolio change today to upgrade your Cash Smart Portfolios. 


Have more questions? The Endowus Investment Office is here to guide you through them.

Detailed historical performance comparison

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