So much modern advice recommend ETF investing and multiple other robo advisors pick the ETF route. Why has Endowus chosen the mutual funds route that typically has higher management fees than ETFs?

Hi Daniel, thank you for your question.

There are a many reasons why we choose to use Unit trusts/Mutual Funds instead but its mainly to be as efficient in terms of cost, FX, tax as we can for Singapore based investors as there are no good SGX-listed local ETFs to build globally diversified portfolios in an efficient manner yet;
1. For CPF and to a lesser extent SRS, ETFs are either not available or cannot be invested efficiently. We have more choices and can build truly globally diversified portfolios at low cost with unit trusts.

2. Many robos use US listed ETFs which are less tax efficient, has bid-ask spreads, can only trade overnight as the market is closed and not live during Singapore time. Some of these like the China Internet ETFs some robos use are very costly 0.79% at the management fee level. So they are not even necessarily cheaper.
3. All our units trusts are lower cost than most ETFs if you factor in all the cost of FX transaction costs and spread they take. And they are more tax efficient and in SGD. Our fixed income funds are all SGD-hedged, which is something the US ETFs cannot do.
4. There are other benefits of UTs such as the fact that we can buy them at NAV down to the single cent wheras ETFs are bought and sold in markets with a minimum number of units so you either cannot invest to the cent or you have to fractionalize it. If you fractionalize it, then it means your money is mixed up with others and comingled. We make sure to keep all your money segregated in a trust brokerage account in your own name, which is the safest way to manage your money.

Probably, they choose it to get more profits in a win-win situation with the

Unit Trust companies.

For wise investors buying mutual funds (because of their often high fees and underperformance) is a thing of the past.

what else to avoid, here:

https://seedly.sg/questions/what-is-your-genera...