Feelings about Fees
TLDR: Reduced wrap fees from 1% to 0.5%
When I joined the investment industry in Q3 2022 due to 3 investment advisors who did not manage my investments as well as I expected, I wanted to find the best place to invest my profits from my property investment. Besides that, I wanted to ensure that my fees are as low as possible, because I know that in the long run, fees will play a significant role in the total return of any investment. After trying to hire some fund managers and failing, I decided to join the industry.
My first goal was to find the best way to invest with the least amount of effort. I found it within my first month of joining the company. (My NUS professors tell me I learn fast.) It is composed of a mixture of funds that is high performance yet low in fees. It is able to provide returns similar to the S&P500 (see line chart below) but with much better diversification to prevent concentration risks. For this “Actively Passive Portfolio”, it is composed of over 12000 companies worldwide. The Total Expense fee is about 0.35% per annum. This is in contrast to many other funds at more than 1.5% per annum. Do check your funds’ product highlight sheet (PHS) for more details.
Recently, when I was attending an investment symposium, I heard Samuel Rhee, chairman of Endowus, say that at 10B (that’s right, ten billion dollars) they are not making much money but they expect to be very profitable when they grow to 20B. That gave me a shock as I thought they should be rolling in cash since they’re pretty much a household name. So I began to look at their fee structure and it looks like they charge a wrap fee of 0.4-0.6% per annum. Based on 10B, that would be about 50 million dollars per annum. Looks like a pretty good business to me.
Hence, in line with my principle of not wanting high fees, I consulted with my management to reduce the wrap fees for all my clients from the default level of 1% down to 0.5% per annum. I have previously reduced the upfront Sales Charge from the default level of 2% down to 0%. For clients with significant portfolio size, the wrap fee will be 0.3% or 0.4% per annum.
I am very excited with the performance of the “Actively Passive Portfolio” and will continue to track the progress. As I continue to tranche in to my long term portfolio, I will continually allocate into the various funds based on the updated allocation ratio derived from the exclusive data I receive. Join me in my investment journey ahead. If you’re located in the CBD, join me for coffee or tea. Don’t be shy!
Relevant Links
Update on Fund Managers Q2 2022: https://medium.com/@singaporeanlandlord/update-on-fund-managers-q2-2022-6182d619075d
Property Exit to Investment Advisor: https://medium.com/@singaporeanlandlord/property-exit-to-investment-advisor-ab5c05409e2e
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