Note: As of Nov'21, Endowus Cash Smart Core is now referred to as Endowus Cash Smart Secure. There are no changes in the underlying investment offerings.
2:49 Introduction to Endowus
6:15 Introduction to Cash Smart
8:17 Cash Smart Ultra Portfolio
14:22 Comparison of Cash Smart Products
15:32 Cash Smart Products projected yields at launch vs actual
21:07 Historical performance of Cash Smart Portfolios
23:13 Projected yields of Cash Smart Ultra Portfolio
27:57 Major Interest and Saving Rates remain lower than Cash Smart
30:43 Endowus provides transparent yield updates
31:40 Endowus Cash Smart vs. our competitors
33:59 Issues with Cash Drag and not investing holistically
36:33 How to start investing your cash and modify your goals with Endowus
Excerpts from the Webinar
8:27 Cash Smart Ultra portfolio and optimisation
Cash Smart Ultra uses a slightly higher number of funds than Cash Smart Core and Enhanced. The portfolio optimises five bond funds from four different managers, to give more exposure in different categories of funds. For example, we have a money market exposure from LGI SGD Enhanced Liquidity Fund and two best-in-class short duration funds, Fullerton Short Term Interest Rate Fund and LGI Short Duration Bond Fund. The portfolio as well includes Nikko Am Shenton Income Fund, which has a slightly higher duration and a different return driver, and the PIMCO GIS Low Duration Income Fund.
These five funds are chosen by Endowus to be the best-in-class to target a higher yield within the defined risk range. On a front level, the historical annual returns and volatilities, shown by the standard deviation are very different because these funds have different return drivers. They offer that specification to each other so we can optimize it on a portfolio level that has a relatively low volatility of 0.65% over the past two years. The whole portfolio is designed to be mindful of the duration risk and credit risk, though, Cash Smart Ultra has a slightly higher duration risk than Cash Smart Enhanced but still below two years.
14:22 Comparison of Endowus Cash Smart Products
On both an annualized basis and a cumulative basis, Cash Smart Ultra has generated a higher return compared to Enhanced and Core. These products go in order of risk, return and volatility; Core has the steadiest and lowest return with a volatility level of 11 basis points, Enhanced has greater returns and a volatility of 0.41% and lastly, Ultra has the highest returns with a volatility of 0.65%. It is important to understand that higher yields come with higher risks and higher volatility.
27:57 Attractive interest rates with Cash Smart Solutions
Cash Smart portfolios are short duration that take very limited duration risk whereas short-end interest rates are still crawling around historical lows. There has been some volatility recently, the market and participants of the market were uncertain about the near-term prospects of inflation. There is some comfort that the FRS has made it clear that they will keep the rate low in the foreseeable future until there is more recovery coming up, so investors can expect short-term and near-term volatility as the market keeps repricing inflation.
Cash Smart portfolios have decent exposure to credit, therefore it is less anchored to the rates and rather it relies more on the health of the economy and the fundamentals of the companies. The upside is that clients can look forward to this improvement. These portfolios are designed to slow duration to still be defensive in this environment. Investors should embrace the increased volatility and understand the opportunities that surround these risks.
Issues with Cash Drag and not investing holistically 33:59
When you are investing your cash, it is really important to know how that affects your overall portfolio. It is never a good idea to hold too much cash if you don't have to own it. The cost of living in Singapore is rising constantly and does not ever seem to be coming down, like house prices but also every other expense is just inflationary.
When you hold too much cash it gives you negative returns and when you invest in a financial market it drags your returns quite significantly. It is important to have the right allocation of cash and then make that cash work for you, don't just put it into a bank deposit that will have low returns, invest it in the appropriate risk level of cash smart products to generate some yield rather than negative yield.