Give the gift of hope 🎁 Support a cause near and dear to you today.

Give the gift of hope 🎁
Support a cause near and dear to you today.

An investment philosophy that serves all clients

Our mission as a company is to address and rectify the long-standing challenges that are impediments to successful investing. These include high fees, as well as the lack of good advice and good products. Our desire is to use scientific, as well as tried-and-tested methods to guide all investors, and tap into the power of the markets to achieve durable, sustainable, and ultimately attractive long-term returns.

We understand that fees, in particular, dramatically and directly affect the returns for investors, and have sought to lower them at every opportunity to achieve the lowest possible cost for our clients. One of the ways to achieve this is to be the leader in the fee-only wealth service, which is always entirely aligned to our clients' best interests.

Our investment philosophy is unwavering and evidence-backed. There is no "timing the market to try and beat it" message in our playbook. We are not changing our views and asset allocation to the latest newsflow or emotional whims of a fund manager. We believe in following a strategic and passive asset allocation. Academic research suggests asset allocation accounts for a range of 75-90% of long-term returns for any given portfolio. We create broadly diversified investment portfolios that generate the highest possible return for every level of risk taken by an investor. This means continually searching the investment universe for the best-in-class funds that will improve the risk-return tradeoff in our portfolios.

We are particularly thrilled to have added more talent to the Investment Office (IO) this past year. We have doubled the staff count in our IO, and correspondingly increased our capability to be able to better serve our clients by several folds.

Our new members have joined Endowus with a wealth of experience from leading global financial institutions, including Morgan Stanley, Mercer, Cambridge, Dimensional, AQR, Morningstar, and BNP Paribas. They have joined this cause because they, too, believe in the need to champion the change in the industry and are aligned with the company's mission and vision.

Endowus 2021 Portfolio Performance

While 2022 has had a rocky start with a significant jump in volatility and rising uncertainty on the market outlook, let's take a quick look back at last year to review how the Endowus portfolios performed in 2021.

The Endowus Flagship Portfolios were designed to gain broad exposure to global markets through a strategic and passive asset allocation, and largely track the global indices over time. While some variations exist, the performance for 2021 was stellar.

All-in-all, the Endowus Core Flagship Cash/SRS 100% equities portfolio ended 2021 with strong performance with a 22.3% return, outperforming the MSCI ACWI as it especially benefited from factor rotations into value and small companies during the year. We continue to hold our conviction that factor tilts towards the long-term proven drivers of return, such as value, small cap, and profitability, will drive excess returns in the long run.

Endowus Core – Flagship Cash/SRS Portfolios

SGD, Monthly data as of 31 December 2021

Q4
2021
Q3
2021
Q2
2021
Q1
2021
2021
Endowus Cash/SRS Portfolio Performance (net of fund-level fees)
Very Aggressive (100-0)5.9%-0.2%6.7%8.5%22.3%
Aggressive (80-20)4.8%-0.1%5.8%6.5%17.9%
Balanced (60-40)3.5%-0.1%4.8%4.5%13.4%
Measured (40-60)2.2%0.0%4.1%2.2%8.7%
Conservative (20-80)1.0%0.0%3.0%-0.1%4.0%
Very Conservative (0-100)-0.3%0.1%2.0%-2.3%-0.5%
Index Net Total Returns (incl. dividends without fee deduction)
MSCI All Country World Index5.8%-0.1%7.5%6.4%20.9%
MSCI World Index6.9%1.0%7.9%6.7%24.2%
MSCI Emerging Markets Index-2.1%-7.2%5.2%4.0%-0.6%
S&P 500 Index10.1%1.6%8.7%8.0%31.2%
Global 60:40 Index3.5%0.0%4.9%2.8%11.6%
BbgBarc Global Aggregate Index0.1%0.1%1.0%-2.5%-1.3%
JPM EM Bond Index0.0%-0.5%3.9%-4.7%-1.5%

On the fixed income side, our portfolios also performed well when compared against major market benchmarks for the full year of 2021. It was more defensive in a generally negative and uncertain environment for the fixed income market.

Endowus Core – Flagship CPF Portfolios

SGD, Monthly data as of 31 December 2021

Q4
2021
Q3
2021
Q2
2021
Q1
2021
2021
Endowus CPF Portfolio Performance (net of fund-level fees)
Very Aggressive (100-0)5.4%-0.3%4.8%6.2%17.0%
Aggressive (80-20)4.2%-0.3%4.1%4.3%12.8%
Balanced (60-40)3.2%-0.2%3.3%2.6%9.1%
Measured (40-60)1.9%-0.1%2.5%0.9%5.3%
Conservative (20-80)0.9%-0.1%1.6%0.9%1.5%
Very Conservative (0-100)-0.2%0.0%0.8%-2.6%-2.1%
Index Net Total Returns (incl. dividends without fee deduction)
MSCI All Country World Index5.8%-0.1%7.5%6.4%20.9%
MSCI World Index6.9%1.0%7.9%6.7%24.2%
MSCI Emerging Markets Index-2.1%-7.2%5.2%4.0%-0.6%
S&P 500 Index10.1%1.6%8.7%8.0%31.2%
Global 60:40 Index3.5%0.0%4.9%2.8%11.6%
BbgBarc Global Aggregate Index0.1%0.1%1.0%-2.5%-1.3%
JPM EM Bond Index0.0%-0.5%3.9%-4.7%-1.5%

The Core Flagship CPF Portfolios wrapped up 2021 well, with four of six of its portfolios outperforming the CPF-OA interest rate of 2.5% as it was designed to do. With the limited fixed income portfolios available on the CPF-Investment Scheme, the fixed income portfolio tends to lag the benchmark both on the way up but should be more defensive on the downside as it is proving to be in 2022.

Endowus Core – ESG Portfolios

SGD, Monthly data as of 31 December 2021

Q4
2021
Q3
2021
Q2
2021
Q1
2021
2021
Endowus ESG Portfolio Performance (net of fund-level fees)
Very Aggressive (100-0)4.3%2.3%6.8%4.6%19.3%
Aggressive (80-20)3.4%1.9%5.8%3.5%15.5%
Balanced (60-40)2.6%1.5%4.7%2.3%11.6%
Measured (40-60)1.5%1.1%3.6%1.3%7.6%
Conservative (20-80)0.4%0.8%2.4%0.0%3.6%
Very Conservative (0-100)-0.6%0.2%1.2%-1.2%-0.3%
Index Net Total Returns (incl. dividends without fee deduction)
MSCI All Country World Index5.8%-0.1%7.5%6.4%20.9%
MSCI World Index6.9%1.0%7.9%6.7%24.2%
MSCI Emerging Markets Index-2.1%-7.2%5.2%4.0%-0.6%
S&P 500 Index10.1%1.6%8.7%8.0%31.2%
Global 60:40 Index3.5%0.0%4.9%2.8%11.6%
BbgBarc Global Aggregate Index0.1%0.1%1.0%-2.5%-1.3%
JPM EM Bond Index0.0%-0.5%3.9%-4.7%-1.5%

Overall, the Core ESG Portfolios ended the year strongly. Outperformance of the equity portfolio in the second half of the year partially compensated for the weaknesses in the first half of the year caused by a rally in traditional energy or commodities names. This brought the full-year performance in line with the broader market. 2022 will remain challenging as the gains of the past several years gave way to a rebound in non-ESG sectors such as energy and commodities again this year.

The only thing certain in 2022 is uncertainty

While markets finished the year at new highs, they were starting to grapple with many uncertainties.

These include the worrisome outlook for inflation and interest rates, rising concerns about China and emerging markets, and the ongoing effects of Covid-19. This year has brought additional fallouts from Russia's invasion of Ukraine that sent shockwaves through the global financial markets. The situation has been exacerbated by sanctions, policy uncertainty, and heightened geopolitical risk. This is stoking fears of stagflation and a long-term correction in markets. While some will continue to try to predict the markets, the current series of events is something that nobody could have accurately predicted, just like when Covid-19 hit us in March 2020.

It is probably too soon to see how this confluence of events will play out in the coming months and how it will affect global markets, the corrections in many financial markets, and growth sectors in particular. Still, disconcerting and ominous developments are already in play.

In particular, the various second and third-order effects off the Russian-Ukraine war could result in lasting changes to not only the geopolitical landscape, but also to different economic and financial systems. One clear impact is in the commodities markets. Russia and Ukraine are major global suppliers of oil, natural gas and other commodities, including many food products such as wheat.

It is important to take a step back and reassess where we are in the cycle.

It is not surprising that the market sees a correction after such a steep liquidity-driven rally. Global markets basically doubled by the end of 2021 from the lows of March 2020, driving a 98% return for the MSCI Global ACWI Index, for example.

We know that with millions of participants around the world trading the news, the market is efficient in pricing uncertainty, and any incremental negative news, into the price of financial assets. There has been a plethora of bad news and it seems they keep getting worse. This is also being priced in.

There are cycles in markets and eventually, the markets will find a bottom and rebound. We are not going to zero, especially when the economic demand is only just recovering from the effects of Covid-19. In fact, higher inflation is only possible because demand remains relatively robust during a supply shock.

Nobel Laureate Professor Samuelson once said that the stock market has predicted nine out of the past five recessions. Out of the 24 market corrections between November 1974 and mid-February 2020, just five became bear markets. The average bear market stretches about 15 months — shorter than the average bull market run of 68 months.

No one can guarantee where the markets will go in the future. In March 2020, the market rebounded faster than we could shout "recession". If there is a ceasefire in Russia-Ukraine and inflation starts to come off in 2H 2022, things could look very different quickly. This is why ultimately, investing is a personal decision and process as everybody is different. Everybody has different risk appetites and differing financial goals across different timespan for their investments.

Long-term investors must prepare an investment plan suitable for them, and stick to it through market ups and downs. The statistics show that the biggest gains are clocked on the days that soon follow a sharp fall. But a lot of people make the mistake of selling down at the bottom. You have to remain invested in order to make sure that you are invested in the days that reap the biggest gains, and to take advantage of the next upturn that will surely come. You take away just a few of these days, and your long-term returns drop dramatically. From that perspective, staying invested is not just a time-tested and successful course of action for long-term investors, it is also a time-honoured vote for hope against the destructive cycles of war and recessions.

2022 outlook is mixed

Expert outlook on growth is favourable, but inflation and monetary policy remain strong headwinds.

Economic Activity

Fitch Ratings in March revised down world growth amid inflation challenges and as Russia’s invasion of Ukraine continues to impact energy supplies. The Omicron variant may restrain services activity somewhat. Tighter monetary and fiscal policies may slow growth later in the year too.

Inflation

Inflation is at multi-decade highs and may stay there for the next several months. The US Federal Reserve in March said it would raise rates more aggressively if needed.

Monetary Policy

The Fed in March approved its first interest rate increase since 2018. Major central banks have also signalled their intent to raise interest rates meaningfully in 2022. EM central banks are well into the tightening cycles.

Source: AllianceBernstein, as of 31 December 2021, Endowus

Back to top