EndowUs Roboadvisor: investing using CPF

[decibel.]

No leh, Endowus Dimensional Word Equity Fund only comprise around 55% USA, while LionGlobal Infnity S&P is 100% USA.

There's a case to go with the World Equity Fund for added diversification, but in a new world of technology and skills, personally I prefer to just go with 100% USA instead.

Oh ya I forgot I thought the other one. Ya S&P is US. But to dump all in one US which is already oversold I would think twice. I prefer diversify. Anyway once hit cap I will stop liao. Think max also 400K if not have to pay tax when withdraw from srs right?

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[decibel.]

Anyone changing to the new funds in EndowUs? If change means they will sell your current allocation and buy new one? Doesn't it mean selling at loss now?

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[assiak71]

Is there a thread on endowus cash/srs?
They are making changes to their portfolio

https://endowus.com/insights/new-cash-and-srs-portfolios/

 

[s0crates]

They have a webinar live soon, should be about the new portfolio change

https://youtu.be/GR5uzEE7wVI

Is there a thread on endowus cash/srs?
They are making changes to their portfolio

https://endowus.com/insights/new-cash-and-srs-portfolios/

 

[hwmook]

Anyone changing to the new funds in EndowUs? If change means they will sell your current allocation and buy new one? Doesn't it mean selling at loss now?

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Why cannot sell at a loss to make more money in future?

 

[FinalDestiny...]

I am accepting the changes for the cash portfolio. For those who do not wish to sit through the entire webinar, most of the details are shared here.

 

[decibel.]

Why cannot sell at a loss to make more money in future?

I'm on 100% equities. I'm seeing the difference is reducing weight of developed markets to 85% and increasing weight of emerging to 15%. What's the good part in this to change the portfolio?

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[cfleee]

The cash portfolio changes are interesting. Endowus were the ones that brought in the Dimensional World Equity Fund as an SGD fund and now they are recommending that the clients switch out their equity from it.

Global Core Equity and Emerging Markets Large Cap Core seem to be the same funds that MoneyOwl has been using for equity too, so that makes sense, but now there's the Pacific Basin Small Companies fund and the Vanguard/LionGlobal S&P 500 fund? That's really unexpected.

They justify the Pacific Basin small cap fund as lowest correlation with the other equity funds they were considering, for that efficient frontier thing. Maybe that's worth the TER premium (0.64%, vs 0.30%/0.44% for the developed and EM fund)?
The Vanguard S&P 500 fund is large cap by definition though, and since it's almost equal allocation as Global Core Equity, would it be working against geographical diversification and the DFA small tilt. Their FAQ page about it mostly focuses on it being the first low-cost passive fund made available for CPFIS and not much about what it's doing in cash/SRS portfolio.

Overall it ends up looking overweight on U.S. and the Pacific Basin countries compared to MSCI ACWI or even the 88/12 Global Core Equity/EM Large Cap Core mix that MoneyOwl adopts. Is this still as passive as they claim to be?

• Global Core Equity Fund (SGD, Acc.) was 63.65% United States, 9.26% Japan as of 30 April 2020.
• Emerging Markets Large Cap Core Equity Fund (SGD, Acc.) was 37.30% China, 15.94% Taiwan, 14.29% Korea as of 30 April 2020.
• Pacific Basin Small Companies Fund (SGD, Acc.) was 56.61% Japan, 13.97% Australia, 10.62% Taiwan, 7.08% Hong Kong, 6.40% Korea. (The remainder is split between Singapore and New Zealand, according to the dated-end-Nov 2019 annual report. China is also eligible according to the prospectus.)

I only took a quick look at the fixed income portfolio changes but they seem to refer to some medium-term views in removing the inflation-linked fund, so I guess they are more comfortable playing a more 'active' role for fixed income asset allocation.

EDIT: it just occurred to me that the EM fund is large caps only, I wonder the weighting makes sense if we calculate across a comparable set of indexes like MSCI World IMI + MSCI EM Large Cap instead of MSCI ACWI. But it's still different country weighting from the DFA World Equity Fund.

 

[assiak71]

I too dont understand their allocation. They say align with their cpf asset classes. But why these 4 allocations?

S&p500 - this suggests overweight US

Pacific sc - reason they give is it improves the portfolio risk-adjusted returns - i wonder if that really works because on its own its returns are not good

But as a whole it seems better than their old portfolio, at least based on historical returns so hopefully thats a good thing going forward

 

[cfleee]

The bit that really concerns me is whether the asset allocation will become more and more complicated after this.

Previously very straightforward -- the story for the cash portfolio (that admittedly doesn't get much attention compared to the CPF one) focuses on passing through your money to Dimensional as the fund manager at lowered costs of the institutional share class.

Now -- ok, maybe World Equity Fund is expensive or going away, you can split up into the two DFA funds of developed + EM large cap, that won't cover EM medium/small cap so it's cheaper too.

But right now if I put my conspiracy theory hat on, it's as if they are looking to spice things up. S&P 500 will zhng the backtesting, the pac basin small cap conveniently balances out the U.S./large cap of S&P 500 to diversify things back a bit. Asset allocation now looks a lot less passive and more like their own layer on top of Dimensional's tilts... if you squint hard enough, picking DFA funds looks like other robos picking their index ETFs.

 

[zuppeur]

what is the min initial amount for cash investment?
on the website, i notice 10k.

for 100% equity, endowus TER is 1%. isnt it cheaper to just go with infinity global with dollardex. The TER is abt 0.75%

 

[assiak71]

Anyone contacted them to ask about their new cash/srs equities AA rationale? I hope it is not backward looking but based on some solid justification

 

[decibel.]

No. Will stay on the old portfolio for world instead of the new AA change.

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[s0crates]

I think we as consumers also need to take a step back and ask what do we want from the robo. If you want a pure passive strategy pure index fund just buy VWRA yourself la how difficult is that.

While I ain't too thrilled about the equity change, I am appreciative that they decided to change the fixed income portfolio part to include dimensional fund which is lower cost. Someone shared about how bad MBH and A35 is in terms of diversification, and I got to agree with that.

They are still largely passive in geographical exposure right? I don't see any obvious overweigh of US market, if anything instead of 100% factor based investing we are doing a 63% factor based investing.

 

[s0crates]

Anyway I am going to attend their PIMCO webinar - interesting to know how cheap active bond funds can help produce better results for retirement. At least it will be something refreshing to learn about. And it sure as hell is less silly as investing in unhedged foreign currency denominated bond ETFs some robos are using zzz

 

[assiak71]

I think we as consumers also need to take a step back and ask what do we want from the robo. If you want a pure passive strategy pure index fund just buy VWRA yourself la how difficult is that.

While I ain't too thrilled about the equity change, I am appreciative that they decided to change the fixed income portfolio part to include dimensional fund which is lower cost. Someone shared about how bad MBH and A35 is in terms of diversification, and I got to agree with that.

They are still largely passive in geographical exposure right? I don't see any obvious overweigh of US market, if anything instead of 100% factor based investing we are doing a 63% factor based investing.

For the first part on why not VWRA
1. SRS
2. Why robo is to hands off and let them manage a portfolio of equities and fixed income

For the last part, isnt it obvious. If you have VWRA and S&P500 in roughly 1:1, if it isnt overweighing US what is it

 

[assiak71]

Anyway I am going to attend their PIMCO webinar - interesting to know how cheap active bond funds can help produce better results for retirement. At least it will be something refreshing to learn about. And it sure as hell is less silly as investing in unhedged foreign currency denominated bond ETFs some robos are using zzz

You can have a look at the YTD returns of the 100% bonds portfolio on their website. Compare that to A35 / US treasuries, its quite a big difference. So im not so sure their choices are good

 

[s0crates]

You do the sums - it's the same with their cpf portfolio. Because they have EM funds and Asia pac funds it roughly adds up to a global diversified portfolio, plus minus 5%.

For the first part on why not VWRA
1. SRS
2. Why robo is to hands off and let them manage a portfolio of equities and fixed income

For the last part, isnt it obvious. If you have VWRA and S&P500 in roughly 1:1, if it isnt overweighing US what is it

 

[s0crates]

That's the issue right - A35 and us treasuries did super well because they were high quality government bonds - still can do better in future? Are we expecting negative yields? If we look from hindsight and even look at specific timeframes then sure anything will look good.

Unless there are obvious cost reductions or increased diversification I don't think there can be much that we can expect overwhelmingly positive stuff from Endowus I am afraid. We got to monitor if they stick to what they promise on a high level and question them, and assume their CIO and team knows their sh** and do the right things, even if it's incremental.

Or you can look at how stashaway did it and them making Macro bets. Haha. Passive investing is hard to make interesting. Maybe end of the day what we need is just a RSP from brokerage.

You can have a look at the YTD returns of the 100% bonds portfolio on their website. Compare that to A35 / US treasuries, its quite a big difference. So im not so sure their choices are good

 

[cfleee]

Anyone contacted them to ask about their new cash/srs equities AA rationale? I hope it is not backward looking but based on some solid justification

I asked them specifically about the purpose of the S&P 500 fund in the asset allocation. I won't quote them directly, since their customer service (erm, client experience) folks are probably quite slammed and quickly dashing off replies if they're still jumping on support emails past 11pm, but to paraphrase:

• enhances returns
• S&P 500's low correlation with Pac Basin and EM Large Cap funds reduces volatility
• adding U.S. large cap counterbalances what would have been underweighting U.S. and overweighting small cap, if it was just adding the Pac Basin fund

They also argue that geographical allocation is about the same, the U.S. allocation is around 54.8% in World Equity Fund vs 60% in this new portfolio, and they compare against around 60% in MSCI World.

I think we as consumers also need to take a step back and ask what do we want from the robo. If you want a pure passive strategy pure index fund just buy VWRA yourself la how difficult is that.

While I ain't too thrilled about the equity change, I am appreciative that they decided to change the fixed income portfolio part to include dimensional fund which is lower cost. Someone shared about how bad MBH and A35 is in terms of diversification, and I got to agree with that.

They are still largely passive in geographical exposure right? I don't see any obvious overweigh of US market, if anything instead of 100% factor based investing we are doing a 63% factor based investing.

Anyway I am going to attend their PIMCO webinar - interesting to know how cheap active bond funds can help produce better results for retirement. At least it will be something refreshing to learn about. And it sure as hell is less silly as investing in unhedged foreign currency denominated bond ETFs some robos are using zzz

I think they had a plausible story about being the cheapest way to access DFA equity funds (vs MoneyOwl and the other FAs?), if someone specifically believed in that and wanted to get in on that. So for people that expect that it's still a change lah, but I think existing customers can decline the change so maybe everything is ok.

I'm not really convinced by the Dimensional tilts, so really just questioning whether they are still as passive in asset allocation as their marketing claims

Thanks for your perspective about their fixed income portfolio, maybe worth another look.