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Fund Rationale: Dimensional Pacific Basin Small Companies Fund

Dimensional Pacific Basin Small Companies Fund
SGD Institutional Class Accumulation Shares (ISIN: IE00BG85LH23)

Introductory information
The Pacific Basin Small Companies Equity Fund (the “Fund”) aims to maximise total returns in Singapore Dollar terms over the longer term by investing in the shares of Asia Pacific companies. The Fund applies a dynamic implementation process that integrates advanced research, methodical portfolio design, and careful execution, while balancing risks, costs, and other tradeoffs that may impact performance. The inception date of the SGD share class was 5 March 2019. The Fund is benchmarked against the MSCI Pacific Small Cap Index (net div., SGD). The Fund is suitable for investors who want diversified exposure to Asia Pacific markets with a higher risk-reward profile.

Characteristics
The fund offers broad and diverse exposure to small companies listed in Asia Pacific markets. The fund may invest up to 20% of its net assets in Asia Pacific countries that are considered as emerging markets with the remainder in developed markets. As of 31 Mar 2020, the fund has 2,589 holdings to express that broad exposure,  with the largest geographical exposure to Japan (~59.07%). The value and small-cap tilts are consistent with the factors that are sensible, persistent, and pervasive across markets and cost-effective to capture. The fund has a price to book of 0.76x and a weighted average market cap of S$1.21 billion.

Background information and cost
The Fund has an underlying fund management fee of 50bps per annum (0.50% p.a.) and a total expense ratio of 64bps per annum (0.64% p.a.). As the fund scales, Dimensional and Endowus will continue to reduce the fees paid by the client for the underlying fund. Endowus does not charge an upfront sales charge or any other fees, other than the all-in advice fee. Net assets are US$74.8 million across all share classes as of 30 Apr 2020. The inception date of the SGD institutional class accumulation shares is 5 March 2019 and the oldest share class of the Fund is 26 Feb 2004.

Selection criteria for Endowus
Endowus has selected the Dimensional Pacific Basin Small Companies Equity Fund for its broadly diversified exposure to smaller companies in both developed and emerging markets within the Asia Pacific region with its unique ability to capture returns from quality Asia Pacific equities for a slightly higher level of risk for returns over the long term. It also has unique portfolio diversification benefits as the Fund has the lowest correlation to other equities funds in our portfolio and provides for a more efficient frontier across the risk spectrum for the global Endowus portfolio.

Research by academics show that tilts in equities towards value, size and profitability are pervasive and proven factors that add statistically significant positive returns above the market at an efficient cost. This is often known as smart beta or passive plus as it provides the overall broad exposure to markets capturing the total market returns but the tilts provide smart excess returns that are systematically harvested over the long-term by Dimensionals disciplined and well-researched investment process, rather than as a result of active management. We have reviewed many funds that purport to have smart beta or factor-based investing, but our analysis shows that Dimensional consistently delivers better returns through long cycles and under all market conditions versus peers.

Updated by Endowus: 19 May 2020

** Disclaimer
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.

The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.