Value of a financial advisor: recommended portfolio changes
Endowus Insights

Value of a financial advisor: recommended portfolio changes

November 16, 2021
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Monitoring the investments in your portfolio and trying to optimise for improvements can be a time-consuming and complicated affair. This is where working with a trusted financial advisor like Endowus can help you improve the way you invest. As part of our value-added advice, our Investment Office is constantly monitoring our Advised Portfolios to look for funds that will improve your risk-adjusted returns, optimise your portfolios, and find ways to lower cost. For non-professional investors, having the clout to individually negotiate for a more efficient share class with established fund management companies is usually not on the cards.

As part of our Recommended Portfolio Changes (RPC), Endowus is proud to introduce three updated share classes of existing funds for our Advised Portfolios. This will be rolled out to help clients invest more efficiently and at lower cost.

Our Investment Approach

Our strategic passive asset allocation and investment philosophy remains unchanged: academic research has established that globally diversified portfolios that are risk-return efficient and low cost give investors the best chance of reaching their financial goals. We do not try to speculate or time the market with these Recommended Portfolio Changes.

This drives our Investment Office to always seek out opportunities that ensure our Advised Portfolios and the funds that we use for them are the best representation of this philosophy. At the same time, Endowus recognises that we are partners with our clients on their individual investment journeys and it remains our priority that clients have the choice to opt-in or out of the recommended changes.

Recommended Portfolio Changes for our Advised Portfolios

Endowus will be performing three separate Recommended Portfolio Changes (RPCs) to the Cash/SRS Advised Portfolio (General Investing - Core), the CPF Advised Portfolio (General Investing - Core), as well as the Cash Smart Ultra portfolio. There are no fees payable for any of these RPCs.

Cash/SRS Advised Portfolio (General Investing - Core)

Endowus will be introducing a more efficient accumulation share class for the RPC to the Cash/SRS Advised Portfolio (General Investing - Core). Before this RPC, the Portfolio was constructed using PIMCO GIS Income Fund Institutional Income share class. This RPC will update this for the PIMCO GIS Income Fund Institutional SGD Accumulation share class. The investment strategy for the two share classes are identical. Instead of requiring an additional reinvestment of distributions by Endowus in the case of the old Income share class, the updated Accumulation share class would have any interest received on the underlying securities automatically reinvested by the fund manager, PIMCO. This is a much more efficient structure for wealth accumulation as it cuts down on the time where investible money remains out of the market.

CPF Advised Portfolio (General Investing - Core)

Endowus will be introducing a lower fee share class for the RPC to the CPF Advised Portfolio (General Investing - Core). Before this RPC, the Portfolio was constructed using LionGlobal Infinity Global Stock Index Fund SGD Class.  This RPC will update this for the LionGlobal Infinity Global Stock Index Fund SGD C Class to achieve a cost saving of 0.146% in net Fund-Level Fee. The investment strategy for the two share classes are identical. This is a new share class  recently launched by the fund manager, LionGlobal, and is exclusively for CPF investors only. Through rebating 100% of trailer fees back to investors, Endowus remains the lowest cost platform to access this fund.

Cash Smart Ultra Portfolio

Endowus will be introducing an institutional share class for the  RPC to the Cash Smart Ultra portfolio. Before this RPC, the Portfolio was constructed using LionGlobal Short Duration Fund A share class. This RPC will update this for the LionGlobal Short Duration Fund I share class, the institutional share class of the Fund, a more efficient investment. The investment strategy for the two share classes are identical. We worked with LionGlobal Investors to make the I share class available for our Cash Smart portfolios. The Net Fund-Level Fee remains the same, however as the Gross Fund-Level Fee is lower, it means that more of your money will be invested in the market for a longer period of time. Trailer fee rebates are generally only rebated one quarter later.

What does the Recommended Portfolio Change look like on your Endowus account?

When the Recommended Portfolio Change is initiated, you will be able to opt for the change via two ways. You may click on the notification bell on the Dashboard or view your goal page and select “View the Recommended Portfolio Change” under Goal Settings.

Screenshot of Endowus dashboard with notification bell
Screenshot of Endowus RPC notification

The platform will take you through a comparison of the existing portfolio allocation with the updated portfolio allocation. You will be able to either accept or reject the recommendation. If you do 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 platform will undertake a rebalancing where it will sell the units of the old share class(es). The redemption proceeds  will then be used to purchase units in the updated share class(es). As part of the Endowus value-added portfolio rebalancing service, we will also take the opportunity to holistically rebalance your portfolio back to its target asset allocation. This will be done even if the usual 15% deviation threshold is not breached.

The process will take approximately 5 to 7 business days to complete. You may continue to invest in and partially redeem from the goal during rebalancing, however a full redemption cannot be performed until the rebalancing process is fully completed.

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Investment involves risk. Past performance is not an indicator nor a guarantee for future performance. Projected performance is not guaranteed. Please refer to our full disclaimer here.

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