Webinar: Endowus Q2 2021: Performance review and market insights

With the accelerated roll-out of Covid-19 vaccines in developed countries driving economic recovery, financial markets have delivered higher-than-expected returns in the first half of this year. The MSCI All Country World Index returned 14.4% on a SGD basis in just the first half of 2021. Have investors’ portfolios managed to capture these market returns? How should you position your investments going forward?

0:00 Introductions
5:18 Endowus Fund Smart Introduction
11:52 Q2’2021 Macroeconomic overview DM and Global Market
15:39 Inflation concerns unfounded- inflation remains below trend
22:55 Fixed Income market overview
31:45 Dollardex does it mean endowus rebate must be higher than 0.6% to be competitive with dollardex?
37:48 Endowus Core Advised Portfolio, Cash and SRS
45:20 Endowus Core Advised Portfolio, CPF and ESG
49:45 Comparing Roboadvisors performance, Cash Smart
58:00 2H Market Outlook
1:15:49 Diversification benefits still hold true
1:17:48 Q&A What will happen to my Endowus portfolio if china stocks are delisted in US
1:22:15 Q&A Many are calling out for a correction soon, What is your take on this?

Excerpts from the webinar

On China Stocks delisting and the impact on Endowus portfolio

Sam: This is exactly why we need to have a globally diversified portfolio, so that we dont have a single geographic exposure, if you only bought a china fund, then you definitely would be suffering from the poor returns right now. If you only bought a geographic or sector fund, or gold last year, then there will also be underperformance in certain periods.

We showed you the quilt charts for equities and fixed income because diversification is something that really works. Being truly diversified is the right way to go. About the Chinese stocks and delisting, we don't know how long it will last, and it is an extraneous situation that the Chinese government will dictate the outcome. Anyone that tells you they can predict what is going on next should not be trusted. Do not try to predict the future.

Wei Mei: Some of the regulatory scrutiny that is happening today is long overdue, and if you speak to the fund managers that we collaborate with that is the consensus they have on the market. The Chinese government have a slogan on preventing the disorderly expansion of capital; they want to keep things under control and prevent market exuberance. The government will also focus on common prosperity and social stability, the overall feedback is that we do not expect something systematic that will crash the market, althought headline risk in specific sectors are unavoidable.

Q&A Many are calling out for a correction soon, What is your take on this? (1:22:15)

Sam: We have seen multiple corrections, corrections are normal. In 50% of any year, we will see a correction of 10% or more; 33% of the time we will see a correction of 20% or more. In 90% of the years, we will see a correction of 5% or more. It is very common for us to experience market corrections.  

The more important thing is, are you a short term investor or a long term investor? If you are a short term investor then you would be worried about these market fluctuations, but as a long term investor, especially through a diversified long term portfolio, you should not be worried about volatility. These are opportunities for you to add to your positions and continue to invest in the markets long term, because the returns will compound.

No one can predict these corrections and how long these corrections can be. No one could have predicted that COVID-19 happened and how fast the market recovered from it in a month, although we are still reeling from its impact economically. What we know is that the market will over the long run move upwards in an upward trajectory. For the full year (of 202), we saw a double digit return. Within 3 years, we have 2 periods of massive correction, but look at what the markets has done over the long term.

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