Endowus Cash Smart : Cash Management At Good Value

0.30% per annum.

That’s the interest you’ll receive for leaving your funds in OCBC’s 360 account, which also happens to be the only one that doesn’t require extensive hoop-jumping to achieve.

In clearer terms, that’s a annual yield of $30 on a account deposit of $10,000.

Oh how far we’ve fallen.

While low interest rates tend to stimulate property investments and boost equity prices, it holds down rates especially in consumer saving accounts.

Undermined by the global low interest rate environment, major banks have rescinded interest rates on their high yield accounts even as consumers go hunting for better yields.

Luckily for us, other financial entities have newer offerings which could be more than a match for saving accounts. These products combine value-added offerings and good management into appealing products which we can utilize in our portfolios.

We’re talking about Endowus’s Cash Smart portfolios. With low costs and exposure to short-term debt & money market funds, Cash Smart products are positioned to deliver stability, better yields, and flexibility as well.

Endowus Please

Endowus is a Robo-advisor which offers a wide range of portfolios for growing your wealth on your terms. As part of a new wave of Robo-advisors, they strives to bridge the expense gap between retail and institutional products.

Cash Smart funds are among some of the portfolios offered by Endowus. These funds handily provide exposure to high quality short-term debt & money market funds, giving investors useful options in managing their spare cash.

They also allow us to earn higher returns for our cash sitting in savings accounts. A good place to store funds set aside for an upcoming expense as well.

There are also no lock-up periods for your cash, meaning that vested funds can be withdrawn in 4-6 working days. This ties in with Cash Smart’s aim of balancing liquidity and returns for investors.

Check out these posts for more information on bonds and money market funds.



Let’s delve deeper into the three Cash Smart portfolios on offer.

Cash Secure

Cash Secure combines a Money Market Fund and Short Term Bond Fund to derive projected returns of 0.7-0.8% per annum.

While the Fullerton SGD Cash Fund works mainly with fixed deposits from high credit quality institutions, the Lionglobal SGD Enhanced Liquidity Fund invests in high quality debt instruments with a ultra short duration.

For retail investors, the mean expense ratio for both funds stands at 0.65%. Nonetheless, Endowus offers this fund at an expense ratio of 0.23%.

With excellent credit ratings across the board, and investments in very short term instruments, it’s unlikely to ever have a day of negative performance.

Investors can expect stability and flexibility to respond to rising rates, though sacrificing higher yields in the process.

Cash Enhanced

The Enhanced portfolio switches out the money market fund for the UOB United SGD Fund instead. Expect some volatility with this one as it invests in short term debt instruments with a longer duration.

In return, we can likely expect a yield of 1.2-1.4% per annum.

This fund has a longer Weighted Average Maturity of 1.71 years, and average yield of 1.79% across it’s portfolio. It was able to achieve annualized returns of 2.53% for the past three years.

It mostly carries corporate short term bonds with good credit quality, which would explain it’s higher yield. A relatively short average bond duration allows flexibility to respond to interest rate increases as well.

It’s advised for cash needs more than a month away due to rare periods of negative performance. Which recovers as vested debt matures and cash is reinvested.

For fees, Endowus charges a expense ratio of 0.35% for this fund. Compared to a mean expense of 0.91% for both funds combined if brought through other platforms.

Cash Ultra

Cash Ultra embraces both short and medium term debt instruments to generate projected returns of 1.9-2.1% per annum. Do expect higher volatility as the fed continues to warn of interest rate hikes going into 2022.

Ultra’s higher returns come from a large portion of investment grade (BBB) corporate bonds, alongside slightly longer bond maturities lasting between two to three years.

Among the five different funds in Ultra, some actively target medium term capital appreciation. Others aim for higher yields and are prepared to use bond derivatives to generate returns. All in all a more aggressive bond-centered fund willing to take more risks in order to generate alpha.

Very much recommended for cash needs more than 3 months away due to periods of negative performance. Over time however, returns should be duly reflected as higher yields begin to contribute.

An expense ratio of 0.38% wraps up this fund, as compared to the mean expense ratio of 1.00% through other platforms such as Fundsupermart.

A Tool For Retail Investors

Despite the hearsay, it’s unclear exactly how long interest rates will stay at their current levels. Waiting for them to rise might not be a sensible option either.

For those who actively search for better yields, Endowus’s Cash Smart portfolios could be a viable choice. And at good value as well. Three different portfolios also gives us options to suit our needs and risk profiles.

We’ll also be able to tap into well managed and diversified money markets and short term debt instruments, both of which are unlikely to be offered to smaller retail investors with less muscle.

Perhaps something which we should take into consideration going forward.

Casey H

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