Asked on 07 May 2019
My name is Greg, Co-CEO of Endowus. Thank you for your question and we are sorry it took so long for us to get back to you. You are indeed correct that a broad index fund ETF is lower cost than Endowus. If you choose to go down this route, we encourage clients to buy ACWD (UCITS) through a low cost broker (Interactive Brokers for example) and try not to be caught by a bid-ask spread. I would highly discourage buying US-listed ETFs, given the dividend withholding tax on these products that you should not be paying from Singapore. Note that you can claim back partial withholding tax on interest from bonds, but not on equity dividends. (Example: If equity dividends are 3% and the withholding tax is 30%, you end up paying up to 90bps more unnecessarily.) Endowus offers a few things worth noting, as you assess various investment options.
Access: we believe that the funds we have selected through the likes of Dimensional and PIMCO provide proven implementation that adds value above the market to your investment portfolio, at the lowest cost possible. An example of this implementation is Dimensional’s diversification and systematic tilts. In a single fund exposed to the entire world, there are over 10,000 securities overweight to the long-term risk premiums of small cap, value and profitability, versus the MSCI ACWI commercial index which is exposed to 2,000+ securities at a market cap weight. We expect this to generate alpha over the long-run, as it has through analysis of the long history of market data.
Cost: we only access the institutional share class, which is typically less than half the cost of the retail share-class of unit trusts (mutual funds). If we do receive a trailer fee rebate (sales commission) as most distributors (online brokers, private banks, retail banks, etc.) make most their money, we will refund this to the end client entirely.
Asset allocation: we provide model portfolios that are at different risk weights, and are constantly ensuring that fund managers are doing what they say
Rebalancing: we tell you when you need to rebalance and do it for you at no additional cost
Non-American tax-efficiency: we use UCITS products only (read more https://endowus.com/insights/an-inconvenient-truth-tax-on-us-listed-etfs-04c7532c5d/)
SGD-optimisation: we deal in SGD share-class so you do not have any FX costs, and our fixed income funds are SGD-hedged
Convenience: From onboarding to providing advice to making transactions, everything is done online, on our Endowus platform.
Security: When a client creates an Endowus account, we will create a trust account in the client’s own name at UOB Kay Hian, Singapore’s largest broker. This trust account will handle client assets and process all transactions you make on the Endowus platform. With UOB Kay Hian acting as client custodian, Endowus does not touch or have access to client money. Beyond this, Endowus cuts out conflicts of interest. We are only paid by our clients on their assets with us. Not on transactions, sales, or by product providers (in the form of sales commissions or trailer fees) as most of the industry (including discount online brokers, insurance agents, private banks, retail banks) gets paid. We are therefore never incentivised to sell you stuff that is not suitable or expensive. We only care about growing your wealth in the long-term and keeping you as a client, as this will grow our business. We are serious about independence. Any incentives we receive from asset managers we will return to you in full. This means a 100% rebate on any sales commissions and trailer fees.
In terms of advice, you will see a lot of changes here in the near future as we add features to employ a holistic and scientific approach to your wealth, understanding and addressing your needs. Through goal-based investing, we will help you realise your financial goals and priorities, realistically, so you can design your future. We are not going to try selling you the flavour of the month or put our thumb in the wind. Endowus has experience, and we want to be a your financial partner.
Sam Rhee is our Chief Investment Officer; before Endowus, he was the CEO & CIO of Morgan Stanley Investment Management in Asia.
You Ning Sun is our Co-CEO & CFO; before Endowus he was the CIO of a US$1B+ Singapore-based family office, and has worked at Blackstone Private Equity, Goldman Sachs, and got his MBA at Harvard Business School.
Greg Van (me), Co-CEO & COO; before Endowus I was Grab’s payment and technology partnership lead and worked at UBS investment bank.
Sin Ting So is our Head of Client Experience; before Endowus she spent 8 years in private banking at Morgan Stanley and Nomura.
Joo Lee is our Chief Technology Officer. He has been building trading platforms for a while, at big banks like UBS and Goldman Sachs, hedge funds like Alphadyne, and fintech companies like StashAway.
Sorry that this became a bit of a pitch. I hope this helps as you assess various options. If you are looking for a core long-term allocation to markets, we believe that we provide a competitive solution.
Please feel free to email me if you have any questions at [email protected]