The return potential of each Cash Smart portfolio is positively correlated to the risk profile of the underlying investments. For example, Cash Smart Ultra takes the most duration and credit risk in exchange for higher return potential, followed by Cash Smart Enhanced and then Cash Smart Secure.
The higher risk taken by Ultra and Enhanced in a normal environment does and has provided more upside to the portfolios than Secure, but at the same time, it subjects these products to higher volatility to achieve that higher return. It is therefore important for clients to choose the portfolio based on their goals (i.e what they intend to use the funds for), drawdowns that they are willing to withstand in the worst case scenario and their preferred holding time horizon.
In calculating the probability of the portfolios achieving their intended goals, we closely monitor their performances over the rolling 3-month and rolling 6-month periods. We also look at the maximum drawdown in the past, such as in March 2020, to calculate how long the portfolio took to recover its losses, which was between 3 to 6 months. However, past performance can only be a reference for future returns and not a guarantee of future returns.
You should select a Cash Smart portfolio based on your cash management needs, loss tolerance level for your investment and time horizon. If you need help to select a suitable portfolio for your needs, please speak with one of our advisors. You can schedule an advisory call via https://endowus.com/insights/schedule-call-mas-financial-advisor/.
Note: As of Nov'21 Endowus Cash Smart Core is now referred to as Endowus Cash Smart Secure. There is no change in the underlying investment offering