Endowus is a roboadvisor based in Singapore. In March 2020, Jeremy and myself had the pleasure of meeting Samuel Rhee and Chiam Sheng Shi. They are Endowus’s Chief Investment Officer and Personal Finance Lead, respectively.
On 17 June 2020, I participated in a webinar hosted by Endowus, where Sam and I talked about active investing and passive investing. I want to thank Sam and the Endowus team (especially Sheng Shi) for their kind invitation. Sam is one of the wisest investors I’ve met, and I learnt a lot from him in our 1.5 hour conversation.
Active versus passive is one of the hottest topics in the investing world today and Sam and I covered a lot of ground during our session. Check out the video of our chat below!
Some of things we talked about include:
- My journey in active investing
- Sam’s journey in the active investing world before Endowus
- The “Three P’s of Institutional Investing”
- Advantages that institutional investors have
- Endowus’s focus on doing three things very well for their investors: Access to great investment products; providing good evidence-based investing advice; and lowering costs for investors
- The foundational building blocks of Endowus’s service. In particular, Sam dug deep into Endowus’s innovative full trailer-fee-rebates and how that benefits individual investors. Trailer fees are fees that a fund manager pays to an investment advisor or investment products distributor – and these fees come directly from the investors who purchase the funds. I admire Endowus for rebating the trailer fees it receives, because these fees are a huge hidden cost that eats into the returns investors earn; the presence of trailer fees is also a big reason why fund management fees are so high in Singapore.
- Endowus’s investment philosophy:
- Maximise returns by minimising cost
- Enduring belief in power of markets
- Time in markets vs market timing
- Asset allocation is everything
- Strive for the efficient frontier
- Diversification improves risk-return
- Optimise based on personal risk tolerance
- Know your limitations
- My investment philosophy
- Traits of a good active investor
- Etymology for the words “invest” and “投资” (Mandarin word for invest) and how this may be affecting investor-behavior in Western and Eastern societies.
- Capital-flows into active vs passive funds
- Evidence showing why active investing often fails
- My thoughts on why it’s still possible to beat the market
- The reasons why previously successful active managers end up underperforming
- My book recommendations for new investors: Thinking, Fast and Slow by Daniel Kahneman, and One Up On Wall Street by Peter Lynch.
- The importance of having low costs in the investment products we’re investing in
- How Endowus provides industry-leading low cost investment solutions for investors
- Investors’ behavioural mistakes during the COVID-19-driven market panic seen in the first half of this year
- The important distinction to be made between the terms “active” and “passive” when applied to investing. Passive investing is often understood to be the use of passively-managed index funds as the preferred investing vehicle. But is someone who often jumps in and out of these index funds a truly passive investor? Is a person who picks stocks, but who then holds these stocks patiently for years, active or passive?
- How I manage cash in an investment portfolio
- On hindsight, are there any changes to our investments we wish we had made during the market panic in the first half of 2020
- Endowus’s desire to constantly improve their offerings for investors whenever they find better investment products.
Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life.
HI Ser Jing,
Just watched the webinar recording. Was expecting sort of a more debate.
I have a question, but before that, I like to ask, you mentioned David Gardner a few times, but not David Kuo. May I know any reason why, especially when David Kuo was in Motley Fool Singapore and now in The Smart Investors, together with you.
Thanks.
Hi Jason! I worked very closely with David Kuo for nearly 7-years when I was at The Motley Fool Singapore. I learnt a lot from David Kuo under his leadership, and he’s a wonderful human being. In fact, David Kuo’s an advisor for the investment fund that Jeremy and I co-founded recently. The Smart Investors is co-founded by my ex-Fool SG colleagues, David Kuo, Chin Hui Leong, and Joanna Sng. I think it’s a wonderful website for investor education, and they’re doing great work! I mentioned David Gardner a few times during the webinar because the things David Gardner said before were relevant to the topic we were talking about. I’ve learnt so much from so many different people, it’ll be hard to talk about all of them during a short webinar =) – Ser Jing
Hi Ser Jing, thanks for the reply.
Long text ahead:
Great to know there are no bad blood. Because my question is related to something which David Kuo said like maybe 2 or 3 years ago on STI, which was also briefly touched on in your video. Forgot which event it was, but I think it goes something like STI is not really concentrated in Singapore, but it is also diversified in Asia Pacific.
While I do buy the idea that STI is but a small player in the global market, I think many people, at least for myself, started investing in STI because it was mentioned many times (not only David, but many other respectable investors few years back, and even till today).
So, put it simply, have I misunderstood David message, or things have changed, or you guys just have different opinions.
A sort of follow up to the question is,
For good reasons, I can understand why Compounder Fund, and to certain extend, Endowus, do not want to accept small amounts from investors. But I hope you do see that the people who really need to grow their money are from the lower rung of society. People who are unable to afford one lump sum of $10k or $100k.
Are there any other alternatives which allow small investors to grow their wealth? Another reason why small investors started with STI could be because of the flexibility. $100/month @ 1% fees is very decent compared to traditional brokers and insurance unit trusts. A lot of people will say save up $100/month until $10k. But you did say in the video, and I agree, to be stay invested at all times.
So, do you have any advise how to reconcile low barrier to start investing vs staying invested at all times?
Hi Jason! I can’t speak for David about his latest views on the STI because it is not something we’ve spoken about. On my part, when I first started writing for Fool Singapore in January 2013, I thought the STI was a decent instrument for long-term investing. But over time my view changed, because I realised that the index is painfully concentrated (4 stocks make up 45% of the index; 37.7% of the index is in banking). The index also has no representation at all on the growth industries of tomorrow: cloud computing, DNA analysis, precision medicine, e-commerce, digital advertising, and more.
I obviously cannot speak for Endowus. But for my investment fund, I can share why it’s only open to accredited investors: Because the regulations make it practically *impossible* to open the fund to all investors in Singapore right now. Under Singapore’s regulatory framework, to run a fund that can accept all investors in Singapore requires you to have a fund management company that is licensed to handle retail investors. Some of the key requirements in setting up such a company is this: Two directors with more than 5 years of relevant experience, and one CEO with more than 10 years of relevant experience. There’s simply no way that Jeremy and myself can fulfil this. But, as we grow our investment fund and clock the hours, there is a path to eventually open our investment fund up to all investors in Singapore – but it will take time. If you chance upon our investment fund’s website, you will notice that one of our fund’s long-term goals is to open it up to all investors in Singapore. We also intend to run our fund transparently so that its return and actions can be a source for investor education. We also have this blog that you’re reading, where we do our best to educate investors. So yes, I absolutely do see the fact that people who *really* need to grow their money are the less fortunate ones in society – we are doing our best to help them now (by providing free education resources) and eventually (by working hard to open the fund up to all investors in Singapore over time).
On alternatives, do note I *CANNOT* give financial advice. So this is just my two cents: There are exchange-traded funds (ETFs) in the US stock market that track highly diversified, broad-based global or regional market indices. These ETFs can be bought at very low cost. There are roboadvisors in Singapore too who can accept regular but small investments. In fact, MoneyOwl can accept monthly investments of as low as S$50 per month. MoneyOwl invests in high-quality funds run by Dimensional Fund Advisors that are highly diversified and tilted toward scientifically-proven factors that provide above-average returns. And they do so at a low all-in cost of not more than 1.21% per year. This paragraph, I believe, also reconciles “low barrier to start investing vs staying invested at all times.”
Thanks for asking your questions. They touch on topics I am really passionate about.
Ser Jing
Hi Ser Jing,
Thanks for the reply. Am glad to know that least someone else shares my sentiments that there are more we could do to offer to the less fortunate. It is lonely out there in some of the chat groups I am in, everyone seems to be concerned with growing their own wealth only. Also very encouraged to know that you are selflessly giving investing knowledge for free. you could have chose to charge thousands for a course like what others are doing, but did not.
Here is to your (and Jeremy, and everyone else at The Good / Smart Investor) successes.
Cheers.
Hi Jason! Thank you for your well-wishes and encouragement. Yes, it will be wonderful if more people can look out for the less fortunate. I thank you for thinking of them too! – Ser Jing