How The Endowus ESG Portfolios Can Help You Get Exposure In ESG Investments

This article was written in collaboration with Endowus. All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.

In recent years, ESG Investing, also known by some as sustainable investing, has gained increasing traction in the investment world – as both retail and institutional investors become more conscious of the broader impacts of the companies they invest in.

If you are not familiar with the term, here’s a quick primer. The acronym ESG stands for Environmental, Social & Governance. In the ESG investing framework, investors consider these factors when identifying quality companies to invest in, in addition to the financial performance of the companies.

Here’s a breakdown of what each of these factors represents, as explained by Endowus.

Source: Endowus

For those of us who have been investing for a while, we could be forgiven for wondering why we need to start assessing companies beyond just their financial performances. After all, isn’t the point of investing to generate fair returns from the companies that we invest in?

Well, the aim of ESG investing is to do just that – generate fair, or higher returns from the companies we invest in. However, in addition to that, ESG investors are also interested in whether the companies they invest in are able to make a positive social and environmental impact.

In our everyday lives, topics such as environmental sustainability like reducing plastic usage, switching to clean energy and minimising our carbon footprint have become everyday conversations. Even in schools, our children are taught the importance of the 3Rs – reduce, reuse and recycle. If we are already taking environmental sustainability seriously, why shouldn’t we expect it from the companies we intend to invest in?

Similarly, social issues like how we can become a more inclusive society for the disabled and disadvantaged, as well as the welfare of employees of a company have become important topics. Some of us also care deeply about equality in the workplace across gender, race and age.

If you and I care about these issues as individuals and would ideally want to work in companies that take these things seriously, why shouldn’t we extend it to the companies we invest our money with?

In other words, ESG investing isn’t just about taking into consideration new factors that we have never thought about before. Instead, it introduces some of the areas that many of us already feel strongly about – the environment, social issues, good governance – and to put our money where our mouth is. The idea here is that if we care about these issues individually, we should also expect the companies that we invest in to take them seriously.

How Endowus Make ESG Investing Better For Investors In Singapore

To make it easy for Singapore investors to get started on our ESG investing, Endowus, a FinTech platform that aims to help Singaporeans grow their wealth by investing systematically, has introduced a series of portfolios made up of ESG funds “Endowus ESG Portfolios”. This is an advised portfolio by Endowus that helps you gain investment exposure to a well-diversified ESG portfolio comprising of equities and/or fixed income products, across developed and emerging markets and across different investment strategies.

To get started on Endowus ESG Portfolios is exceptionally simple.

First, select your investment goal. Endowus provides three main options – General Investing, Cash Smart and Fund Smart. Select General Investing.

Under General Investing, you can select between 1) Core & 2) Environment, Social and Governance (ESG). For those of us who are already existing Endowus investors, Core is likely the portfolio that we started investing with.

We now have an additional choice of choosing the ESG option if we wish to invest in an ESG portfolio via Endowus.

Similar to the Core Advised Portfolio, we will choose our risk tolerance level and Endowus will help us build a customised ESG portfolio that is suitable for our risk profile.

Once we have set our risk tolerance level, we can review the ESG Portfolio that has been constructed for us.

For example, based on an Aggressive profile, our portfolio is 80% invested into equities across three different equity funds, and 20% across three different bond funds. The breakdown of the fund-level fees, trailer fee rebates and the total annual fees that we will be paying are also shown to us.

Based on our allocation the total annual fee payable is 1.57% (inclusive of a 0.6% Endowus Access Fees). This could be lower, depending on the portfolio that has been constructed for us, and also how much you invest with Endowus.

You can see further details of the investments that we will be making.

You can read more about the in-depth ESG portfolio construction and ESG historical volatility and returns on Endowus Insights.

What Are The Equity & Fixed Income Funds That Endowus Invests In

Currently, Endowus offers up to six different ESG equity and fixed income funds in their ESG portfolio, depending on your risk tolerance.

If we are self-directed investors (i.e. we want to decide the funds to invest in and how much to allocate to each fund), we can also choose to invest directly in these ESG funds via Endowus Fund Smart. Endowus Fund Smart allows investors to pick a combination of up to 8 funds from a curated list of best-in-class funds that have been carefully selected by the Endowus investment team. Within Fund Smart, we can choose some of the (or only) ESG funds that are highlighted above.

The advantage of using Endowus Fund Smart is that while we get to choose the ESG funds we wish to invest in and the asset allocation we want, Endowus will do the mundane but essential task of rebalancing our portfolio regularly for us. This makes Fund Smart a viable long-term-investment strategy for ESG investing since our funds will be managed in accordance with our preference, without the need for us to be hands-on at all times.

Read Also: How Endowus Fund Smart Can Help Investors Create Their Own Best-In-Class Unit Trusts Portfolio In Singapore

Enjoy The Benefits That Endowus Investors Automatically Get When You Invest In An ESG Portfolio

When you invest in any ESG portfolios via Endowus, you get to enjoy all the usual benefits that Endowus investors always get when they choose to invest with Endowus.

These include gaining access to the best-in-class funds that have been carefully curated by the Endowus investment team. To ensure that you enjoy as much of the returns from your investments as possible, these are typically institutional share classes that do not charge any trailer fees. If a trailer fee is payable, Endowus will return 100% of the fees to you, thus lowering your cost of investing.

When you invest in Endowus ESG Portfolio, your portfolio is well-diversified across multiple sectors, asset classes and geographical regions. Risk management is also applied to this portfolio to ensure you get a good return for the risk that you are willing to accept. This is particularly useful for investors who want to accumulate wealth over the long-term, which is what Endowus advocates.

Depending on your preference, you can also choose to invest a regular amount each month or to make a lump sum investment.

If you like to get started on ESG investing today with Endowus, you’ll be happy to know that DollarsAndSense readers can have their first $10,000 managed for free for 6 months, which translates to savings of $20 in fees. Sign up using this link to claim this special offer. Terms & conditions apply.