So Endowus launched their Fund Smart platform recently.
And I genuinely mean it when I say Endowus Fund Smart is better than the other options out there.
You’re leaving money on the table if you use FSMOne or a financial advisor / bank, instead of Endowus.
Note: To clarify, this review is on Endowus Fund Smart, the platform that allows you to invest in funds (similar to FSMOne). For a review on Endowus (the roboadvisor) check out this article instead.
Basics: What is Endowus Fund Smart?
Endowus Fund Smart is a platform where you can invest in funds and unit trusts.
It’s the kind you would usually buy off FSMOne, or a financial advisor from Great Eastern.
But – Endowus Fund Smart is actually way better than either FSMOne or a financial advisor, in my view.
The best features of Endowus Fund Smart are:
- Amongst the Cheapest Fees in Singapore
- Pre-Selection of Funds
- Projected volatility and returns
- Multiple Funding Sources – Cash, CPF and SRS
- Full control over Rebalancing
1. Amongst the Cheapest Fees in Singapore
This to me, is the biggest advantage of Endowus Fund Smart.
It has the lowest fees in Singapore.
Why it’s so cheap, is because of something called trailer fees.
How do trailer fees work?
A bit of background is required.
FSMOne allows you to access the funds for free, and there is no platform fee, no sales charge, and no brokerage fee. In fact when you buy the fund, you don’t pay anything to FSMOne at all.
But of course, FSMOne is a profit driven company, so how do they make their money?
The answer is trailer fees.
And the way it works, is that out of the fund management fee that you pay to the fund, the fund manager will take a portion and pay this to FSMOne.
Imagine that you invest $100,000 in a Blackrock Fund on FSMOne.
There are no sales charges or platform fees, so you pay nothing to FSMOne to buy the fund.
But you may pay a 1.5% annual management fee to Blackrock.
That’s $1500 a year.
Of the $1500, Blackrock may then pay $1000 to FSMOne.
So this is effectively a hidden fee, because you pay nothing to FSMOne, but you pay extra to the fund manager. Who then takes the fee from you and pays FSMOne.
It’s very clever really.
Endowus Fund Smart
The difference with Endowus Fund Smart, is that Endowus takes no trailer fees from the fund managers. All the trailer fees the fund pays to Endowus, are paid back as rebates to you.
Long story short – you will save on fees, when you buy through Endowus Fund Smart.
There are a couple of great illustrations below – showing how Endowus Fund Smart is the cheapest option in Singapore.
Cost comparison example for PIMCO Fund
Cost comparison example for CPF Portfolio
Cost comparison for Typical Cash Management Account
2. Pre-Selection of Funds
All funds on Endowus Fund Smart are pre-selected by Endowus.
They’ll only pick the funds that meet their due diligence process:
One potential concern is that this reduces the number of options available to you.
Personally, I don’t think it’s a big issue. I’ve met the team before, and I genuinely believe it when they say that they’re trying to ensure only the best funds go on their platform.
And the options currently available on Endowus Fund Smart are some of the biggest names out there, including:
- First State
- Lion Global
It’s unlikely you’ll need to go beyond this list frankly, unless you’re executing a very niche strategy.
3. Projected volatility and returns
Endowus Fund Smart will generate a graph showing projected volatility and returns of your portfolio going forward.
It’s a great feature to visualize how things will play out if historical returns are extrapolated.
A word of caution – the numbers are based on historical performance.
There’s no guarantee that future performance will hold up the same way, so do not take these numbers without understanding the assumptions behind them.
4. Multiple Funding Sources – Cash, CPF and SRS
You can fund via Cash, CPF-OA, or SRS.
This is amazing stuff.
There are very few other platforms out there that allow you to access your CPF-OA in this way.
5. Full control over Rebalancing
You also have full control over rebalancing, which is built around a 15% trigger.
There’s an automated email to you before rebalancing is done, so you have 24 hours to disable the rebalancing if you so choose.
Personally, I really like this future.
The full mechanics below for those who are keen:
If an underlying fund drifts by more than 15% from its target allocation (i.e. a fund with a target allocation of 20% moves by +/-3%), we will send you an email to inform you. Please note that if the deviation from the target allocation is less than $100 in value, no rebalancing will be advised.
You will have the option to opt out of rebalancing if you choose, however, we believe an optimized rebalancing that maintains the target asset allocation is a meaningful contributor to long-term returns. If you do not choose to opt out of rebalancing your portfolio back to its target asset allocation, we will go ahead to execute the rebalancing 24 hours after you receive the email.
Every cash flow (deposit or withdrawal) is used to rebalance your portfolio towards the target weights. In the absence of cash flows, we rebalance by selling and buying existing funds in the portfolio.
Potential use case for Endowus Fund Smart
Couple of use cases I can think of:
To express an investment thesis
If you have an investment thesis you want to express, Endowus Fund Smart can come in really handy.
For example you may want to invest in short duration bond funds that are SGD hedged
It’s tough to do that as a retail investor because we don’t have access to these products cheaply, and you can never build a portfolio cost effectively the same way the big fund managers can. With Endowus Fund Smart, you can access either a PIMCO GIS Low Duration Income Fund or Dimensional Global Short Fixed Income Fund directly.
Tweak portfolio allocation from standard Endowus offering
Their standard offerings are set out below, and you can tweak the allocation to your heart’s desire.
Passive investment strategy
Or if you want to build a passive portfolio, using managed funds instead of passive ETFs, Endowus Fund Smart is likely cheaper than FSMOne because of the trailer fees rebate.
To create a high yield cash account
You can also create a high yield cash account that yields more than DBS Multiplier or StashAway Simple.
Endowus Fund Smart gives you full control to mix and match money market funds as you deem fit:
How would I use Endowus Fund Smart?
In 2019 I was under the belief that investment grade corporate bonds and US treasuries were a fantastic investment because I believed that interest rates were going to zero.
I could express the trade for US Treasuries via the TLT ETF or Eurodollar futures, but it was a lot harder to express the same idea for investment grade corporate bonds.
A PIMCO Bond Fund would have been a great option back then.
And that’s probably how I would use Endowus Fund Smart – As a complement to my portfolio, to express a specific investment thesis. I keep the stocks / REITs / ETFs I own, but I now have the option to throw in managed funds as well.
Closing Thoughts: Why you NEED to use Endowus Fund Smart
Endowus Fund Smart is the cheapest (and very convenient) way to access managed funds in Singapore.
It’s because of how the trailer fees rebate works.
And you can also use your CPF, SRS and Cash as funding options, which is a great touch.
So if you’re planning to build a managed fund portfolio, and the fund is available on Endowus Fund Smart, you really should get it from Endowus. It’s likely to be way cheaper than any other option out there – whether it’s FSMOne or your financial advisor or bank.
You can always check before you buy – do watch out for the hidden trailer fees (you’ll have to check the fees you are paying to the fund manager)!
And really, all the other features like rebalancing or projections is just icing on the cake. Because you’ve already saved money on fees, to buy the exact same product.
It’s like trying to buy the same product on Shopee, Lazada, and NTUC. If one of them offered it cheaper, you would go with them right?
It’s a sponsored post, but I genuinely mean it when I say Endowus Fund Smart is better than the other options out there. Seriously. You’re leaving money on the table if you buy the same fund via FSMOne or a financial advisor / bank.
FH Endowus Promo Code
When you create your account from this promo code, you will get S$10,000 managed free for 6 months ($20 equivalent). So don’t forget to use it.
Referral Link: https://endowus.com/r?code=FH_UBKPYJNYGL
Note: This post was sponsored by Endowus. All views and opinions expressed in this post are from Financial Horse.
But FSMone’s management fees are 0.5% per annum, less than 0.7% at Endowus
But with FSMOne you pay higher management fees to the fund though. While Endowus gives you a rebate from the management fees paid. Once you factor this in Endowus will be cheaper.
What’s the guarantee that trailer fee rebates will not be reduced in future?
The team seems pretty committed to the trailer fee rebate, it’s part of their core philosophy. I would be highly surprised if they decide to do away with it.
But no formal guarantee – it’s similar to how FSMOne can technically raise fees anytime they want to.
Is Endowus MAS regulated?
Yes they are: https://endowus.com/legal/terms-and-conditions#:~:text=Endowus%20holds%20a%20Financial%20Advisers,Investment%20Products%20%2D%20Collective%20Investment%20Schemes
I was wondering throughout why you were so positive of EndowUs until I saw it was a sponsored post. I do agree that Endowus is an attractive platform since I have compared it with other robos and fsmone myself.
Though for me, the comparison tends to blur between the robo-advisors like stashaway, endowus, syfe, kristal.ai. All of which I have created an account but currently not invested in.
I used endowus and stashaway previously for my emergency funds.
Actually just to clarify – this review is for Endowus Fund Smart, which is the platform to buy funds. It’s slightly different from the Endowus Robo Advisor (which I agree, is much closer to StashAway/Syfe and the rest of the Robos).
As a fund platform specifically, I think Endowus Fund Smart is great and better than FSMOne because of trailer fee rebates. As a roboadvisor… well it’s a completely different product (did a review on it earlier this year: https://financialhorse.com/endowus-review-best-investment-for-your-cpf-srs-funds-and-promo-code/ ).
So would it be more cost effective to buy funds with endowus compared to ETFs from FSMOne? Have u done such fees comparison?
Well it would depend a lot on the funds v etfs you’re using. It’s not an apples to apples comparison though.
Hi, I do not see Endowus Cash Smart FS Ultra under their cash smart portfolio… Is this a DIY fund smart pick ?
Yes that’s right. It’s a DIY style fund pick.
Thanks for the informative article. I didn’t see this article appear on the Patreon page?
Wondering could you clarify the difference between this and a Regular Savings Plan (RSP), say something like Saxo’s RSP which offers access to Blackrock?
Actually both are very similar. Especially if you pick the same end funds. The one diff with Endowus is the trailer fee rebate, so the all-in cost may be cheaper if you use Endowus. But it’s worth confirming this before you sign up, as each fund is slightly different.
I tried to create account. One big concern that stopped me is the minimum initial investment is 10000
To be fair that’s not a hard requirement. If you fund less than $10,000 they will still accept you as a customer. 😉
im a fresh grad novice investor putting a $10k lump sum into the S&P and am quite confused by the charges. if i could find a brokerage with 0.1%++ fees, would i be losing out a lot by going with endowus?
option 1: buy VUSA directly (irish domiciled S&P on the LSE).
Im currently with UOB KH which charges 0.35% min £25 per trade fees, or i think others charge 0.05% – 0.10% (+ forex risk + custodian fees + hassle) or…
option 2: use endowus to buy Lions global 500. isn’t endowus adding another layer of middlemen by choosing lions over vanguard directly?
Thank you!! any thought are appreciated 🙂
UOB KH has quite high fees. You can use a low cost broker like Saxo or Tiger, which will reduce the fees significantly.
Endowus’s advantage is for the managed funds. If you’re doing a pure S&P500 passive fund, I believe DIY investing will be cheaper.
More details in the stock broker review here: https://financialhorse.com/best-stock-broker-2020/
Hi FH, as a comparison with Endowus for Infinity S&P500 Index Fund, POEMS do offer 0% fees. Is there any hidden cost?
You mean for POEMs? Will need to take a closer look at the fund level fees. If you just wanted the S&P500 exposure why not just buy the SPY, fees are 0.095%.