Endowus Cash Smart – A Safe Place For Your Short Term Goals? (Review)

Endowus Cash Smart Review
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You’ve set aside some funds for a big purchase in the near future. However, the interest rates offered by banks are really low! Is there a better place to place your savings?

If you are looking for a relatively liquid and low risk option, Endowus Cash Smart may be something you can consider.

Here is how this cash management portfolio can help you grow your savings.

What is Cash Smart?

Endowus Cash Smart is a cash management portfolio that invests your money into different funds. These funds are usually rather liquid and provides a better yield than a savings accounts.

Some examples of the funds that Cash Smart invests in include:

  1. Cash funds
  2. Money market funds
  3. Short duration bond funds

Cash Smart aims to offer you access to these funds at low costs.

What funds does Cash Smart invest in?

Here are the 3 main funds that Cash Smart invests in:

#1 Fullerton SGD Cash Fund

The Fullerton SGD Cash Fund aims to provide you with a return that is comparable to fixed deposits. Your funds will be placed in Singapore Dollar Deposits.

Here are the main banks where your funds will be deposited in.

Fullerton SGD Cash Fund Top Counterparties

The returns that you receive are based on fixed deposit rates. As such, the returns you earn on your funds will be stable, but rather low.

The Fullerton SGD Cash Fund is the same fund that MoneyOwl WiseSaver invests in as well.

#2 LionGlobal SGD Enhanced Liquidity Fund

The LionGlobal SGD Enhanced Liquidity Fund aims to invest in high quality debt instruments. Here is the allocation of where your funds will be invested in.

LionGlobal SGD Enhanced Liquidity Fund FactSheet

The main things you would want to take note include:

  1. The assets are heavily weighted in Singapore (almost 50%)
  2. It is pretty diversified across different sectors

#3 UOB United SGD Fund

The UOB United SGD Fund will invest your funds in these few instruments:

  1. Money market
  2. Short term interest bearing debt instruments
  3. Bank deposits

This fund aims to provide you a better return compared to Singapore dollar deposits. Here are some characteristics of this fund:

United SGD Fund Factsheet

These are some things you may want to take note of:

  1. The fund is less weighted to Singapore (only an allocation of 37%)
  2. The top 5 holdings are more spread out (each only constitutes around 2% of the entire fund)

The UOB United SGD Fund does provide a higher yield (annualised return of 2.22%). However, it is considered to be riskier than the previous 2 funds. This is because it has the highest duration and credit risk.

Duration risk is the sensitivity of a bond’s price to a 1% change in interest rates.

The longer a bond’s duration, the greater the sensitivity towards interest rate changes.

FINRA

Comparison of the 3 funds

As such, here is a comparison of the 3 funds inside Cash Smart:

FundReturnsRisk
Fullerton SGD Cash FundLowestLowest
LionGlobal SGD Enhanced Liquidity FundMediumMedium
UOB United SGD FundHighestHighest

The riskier the fund, the higher potential yield you will receive!

What portfolios does Cash Smart offer?

Based on these 3 funds, Cash Smart offers you 2 different portfolios:

#1 Core Portfolio

The Core Portfolio consists of relatively risk free investments. The 2 funds found in this portfolio are:

  1. Fullerton SGD Cash Fund (50%)
  2. LionGlobal SGD Enhanced Liquidity (50%)

It provides you with a projected return of 0.9-1.0% (after fees). Endowus believes that you most likely will not experience negative performances.

As such, you are able to store the cash that you need in the very short term, such as in the next few days or weeks.

#2 Enhanced Portfolio

The Enhanced Portfolio provides a slightly riskier composition. This portfolio consists of:

  1. UOB United SGD Fund (50%)
  2. LionGlobal SGD Enhanced Liquidity

You are projected to have a yield between 1.5-1.7% (after fees). Endowus recommends this portfolio if you only require the money later than 1 month from the time you invest.

This is because there is a slight possibility that you may experience negative performances.

How do the 2 portfolios compare with each other?

Here are the 2 portfolios compared side-by-side:

Endowus Cash Smart New Projected Yields November 2020

Why is there a range of projected returns?

Endowus believes in giving you full transparency on the yields of the portfolios. The returns that you earn in your investments may fluctuate each day.

This is because your returns are tied to the interest rates of that day.

As such, a range of projected returns will help you to see how well the portfolio performs in both scenarios:

  1. When the market is bad
  2. When the market is performing well

Moreover, Cash Smart may update their yields from time to time. You can view the latest updates on Endowus’ blog.

Endowus Cash Smart Review October

Key characteristics of Cash Smart

Here are 3 things you may want to take note:

#1 The minimum amount to begin using the Endowus platform is $10k

To use the Endowus platform for investing, you will need an initial investment of $10k. This can come from 3 different sources:

  1. Cash
  2. SRS
  3. CPF

You are able to combine funds from your Cash, SRS and CPF to reach the $10k total. Moreover, you can use these funds to invest in Endowus’ other portfolios, such as:

  1. General Investing (for Cash, SRS or CPF)
  2. Fund Smart

This may be a huge initial amount if you are just starting to invest. As such, this is something you should consider first before you start to use Endowus.

#2 No lock-ups or transaction fees

There is no lock-up when you invest in Cash Smart. This means that you can freely deposit and withdraw from your portfolio from anytime. You will also not be charged any transaction fees.

This really makes the money in Cash Smart very liquid. This is unlike insurance savings plans like GIGANTIQ which charge you a withdrawal fee.

However, you may want to note that the minimum amount for each transaction is $100. You will not be able to withdraw any amounts that are less than $100.

#3 No limits or tiers

Cash Smart does not have any limits or tiers. This means that you can invest as much as you want into this portfolio.

Moreover, the yield that you will receive will be the same, no matter how much money you put into this portfolio!

#4 You can only use Cash or SRS to invest in Cash Smart

Cash Smart only allows you to invest your Cash or SRS. You will not be able to invest your CPF funds into Cash Smart.

How does Cash Smart work?

Here are the 3 main aspects on how Cash Smart works.

#1 Creating your portfolio

To create your Cash Smart portfolio, here’s what you’ll need to do:

1. Go to ‘Invest | Redeem → Add New Goal’

Endowus Cash Smart Create Portfolio 1

If you’ve just created your Endowus account, you would not need to do this step.

2. Select Cash Management as the portfolio you wish to create

Endowus Cash Smart Create Portfolio 2

3. Select the funds that you wish to use to fund this portfolio

Endowus Cash Smart Create Portfolio Select Funding

You can choose to invest either your Cash or SRS funds.

You will have to link your Cash or SRS accounts first before you can start to transfer your funds.

Endowus Linked Accounts

4. Select your portfolio and initial investment amount

Endowus Cash Smart Create Portfolio 4

The minimum amount to start getting invested is $100.

You will then be able to see the Fees and Underlying Funds,

Endowus Cash Smart Create Portfolio 5

as well as the holdings in your portfolio.

Endowus Cash Smart Create Portfolio 6

After confirming via SMS OTP, your portfolio will be created!

#2 Fund your Cash Smart Portfolio

To start investing with Cash Smart, you will need to fund your account.

If you are investing in Cash Smart using SRS, Endowus will automatically deduct the funds from your linked SRS account.

Endowus SRS Request 2

As such, don’t forget to ensure that your SRS account has enough funds!

If you are using cash, you will need to go to ‘Fund Transfers → Deposits‘ in the Endowus platform.

Endowus Fund Transfers

You will need to transfer your funds to Endowus’ bank account. Don’t forget to include your reference code!

Endowus also allows you to set up a recurring transfer. This will allow you develop a savings habit by contributing each month to your short term goal.

Once Endowus has received your funds, you will be sent emails regarding your investment progress.

Endowus Email Update

It took around 2 working days for my funds to be invested.

#3 View your performance

You can view how your Cash Smart portfolio is performing in the ‘Performance‘ tab. Here’s how my Enhanced Portfolio has been performing in one month.

Endowus Cash Smart Performance

My portfolio has been growing pretty steadily over this past month.

#4 Withdraw your cash

When you wish to withdraw your funds, you can easily do so via Endowus’ platform. You’ll need to go to ‘Invest | Redeem‘. You will then need to select the goal you wish to redeem from,

Endowus Redeem 1

as well as the amount you wish to redeem.

Endowus Redeem 2

The amount that you actually receive may be different from the amount you redeem.

This is because:

  1. Endowus will deduct the access fee from your funds before transferring you the remainder
  2. The price at which the units of the funds which are sold may be different from the current asset value

You should expect the funds to reach your bank account within 10 business days.

As such, do try to redeem your funds at least 2 weeks before you require them!

What are the fees to invest using Cash Smart?

Endowus charges an access fee of 0.05% a year for their Cash Smart portfolio. This fee is deducted from your total average daily assets with Endowus each quarter. The fee is pretty affordable and is much cheaper compared to other low cost platforms.

Moreover, Endowus rebates 100% of the trailer fees that it receives from the fund managers.

Endowus Trailer Fee Rebate

Trailer fees are fees that a fund manager pays a platform. This is similar to a commission that the platform receives for introducing the investor to the fund.

Here are the trailer fees that Endowus receives for both of its portfolios.

Cash Smart CoreCash Smart Enhanced
Trailer Fee0.09%0.23%

This will help to offset any management fees that the fund manager charges you. As such, you will be paying 2 layers of fees:

  1. Fund-level fees to the fund managers
  2. Access fee to Endowus

The projected yield that you will receive is net of these 2 fees that you need to pay.

Endowus Cash Smart New Yields November 2020

Is Cash Smart safe?

You may have heard the news about Smartly closing down. As such, you may be afraid of the risks involved with investing in a robo-advisor.

However, Endowus is possibly one of the safer robo-advisors to invest in. This is because your assets are held under your own name.

When you are signing up for Endowus, they will help you to create a UOB Kay Hian account under your own name. This is where all of your assets will be stored.

Endowus Account In Your Own Name

In the event that Endowus closes down, all of your assets are safely under your own name. As such, you are able to decide whether you wish to hold onto the assets or to sell them.

This is in contrast to robo-advisors that co-mingle your assets with other customers under a single custodian account. If these firms like StashAway or Syfe close down, you will have some issues with the transferring of assets.

Verdict

Is Endowus Cash Smart something worth investing in? I think that it is a great place to keep your savings for a short-term goal.

You may be saving up to buy something in the near future, such as a car or house. By placing your savings in Cash Smart, you are able to earn a better yield compared to leaving it in your savings account.

However, here are 2 points you may want to consider first:

  1. The initial investment amount is $10k, which can be quite hefty
  2. It may take up to 10 business days before you will receive your funds

As such, don’t forget to redeem your funds from Endowus at least 2 weeks earlier!

Which portfolio should I choose?

You may be wondering which portfolio you should be using. Here are some considerations for you:

Choose the Core Portfolio for really short term goals

You may need the cash in a few months’ or even weeks’ time. As such, you should go for the lower risk portfolio. Although the yield is lower, you should not experience any negative performances. This ensures that you do not withdraw a lower amount compared to the your initial capital!

If you are looking for a slightly higher liquidity and better yields, you may want to consider the SingLife Account instead. This is a flexible insurance savings plan that provides you with a 2% return on your first $10k.

Choose the Enhanced Portfolio for longer term goals

You may need the money in the next few years. As such, the Enhanced Portfolio provides you with a better yield. With a longer time horizon, this gives you enough time to compensate for any days that you have a poorer return.

Conclusion

Endowus Cash Smart is a great place to store your funds for a short term goal. With its rather high liquidity and decent yield, it may be something that you can consider to earn more returns on your savings.

If you’d like to find out more about Cash Smart, you can view Endowus’ webinar on it below:

Endowus Referral

If you are interested in signing up for Endowus, you can use my referral link to create your account.

Endowus Referral

You will not need to pay any management fees for your first $10k with Endowus for the next 6 months. This is equivalent to receiving a $20 credit.


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