facebookEndowus subscribes to funds like Dimensional that charges lower fees because it does not charge a broker commission. What proportion of funds with Endowus are like this? How does this structure work? - Seedly

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Endowus subscribes to funds like Dimensional that charges lower fees because it does not charge a broker commission. What proportion of funds with Endowus are like this? How does this structure work?

Premise of this question is because I am interested in how Endowus Unique selling point to provide lower fees through funds that do not charge broker commissions. However, the broker free commission fund structure is confusing because the rebate element provided by these funds are confusing.

AMA Endowus

Discussion (2)

What are your thoughts?

Samuel Rhee

Samuel Rhee

26 Aug 2020

Chief Investment Officer at Endowus

Thank you for your question. The reason our overall cost of investing is lower is because we have removed the costs at every layer possible. The reason Dimensional fees are lower is because 1) we access the institutional share class of the funds. and 2) These institutional share class funds have no trailer fees - the commissions paid by the fund manager to the distributors (banks like DBS, brokers or fund platforms like FSM/Dollardex, or FAs). Broker commissions are charged by the platform, broker or bank that you use to buy funds. The distribution commission is paid continuously as long as an investor holds the funds and usually ranges between 0.5% - 1% per annum, or greater than 50% of the fund-level fees. This potentially leads to misalignment of incentives between an investor and distributor, and higher fund-level fees. At Endowus, we try to use the institutional share classes of funds whenever possible, which do not have any trailer fees. If we have to use the retail share class funds, we will rebate any trailer fees received from the fund managers 100% back to our clients. We strongly believe in not accepting trailer fees as we want to stay independent and aligned to the client's best interest and completely focused on building the best portfolios for you rather than selling you products that pay us the highest fees.​​​

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