Endowus launches CPFIS portfolios with lower charges

Locals who want to invest their Central Provident Fund (CPF) savings are being wooed with a less costly option by financial advisory firm Endowus.

Its new portfolio service for such savings is charging all-in fees that are less than one-third of the estimated market charges for a CPF Investment Scheme (CPFIS) portfolio.

The first-year cost of such a portfolio could be 3.52 per cent, but Endowus' effective cost is estimated to be 0.98 per cent for a balanced portfolio, said a Business Times report last month.

Its cost includes an all-in wrap fee of 0.4 per cent as well as the administrative charge of broker UOB Kay Hian, which Endowus is working with for its CPFIS portfolios.

Wrap fees refer to recurrent fees charged based on the total value of investments.

The company, set up last year, charges a wrap fee but takes no sales charges. It also gives rebates to investors from trail fees of a portfolio's underlying funds.

Trail fees are fees that a mutual fund manager pays to a salesman who sells the fund to investors.

Endowus is a fee-only company, which means it charges only its investor clients and is not beholden to any product providers. Clients can choose the investment products best suited to them.

The service was launched on Wednesday, said its co-chief executive, Mr Gregory Van, who added that about 1,000 investors had signed up.

According to financial literacy website Dollars and Sense, Endowus provides access to funds managed by top global investment management companies - such as Dimensional and Pimco - with long track records of delivering great returns which are not normally available to retail investors.

"Endowus allows investors to access institutional share-class funds at institutional-level fees, similar to how major sovereign wealth funds would invest," the website added.

A version of this article appeared in the print edition of The Straits Times on October 18, 2019, with the headline 'Endowus launches CPFIS portfolios with lower charges'. Print Edition | Subscribe