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On surge pricing, institutional share classes, and sales incentives

January 20, 2019

Mutual fund investing is similar yet different to surge pricing. We get the same experience but could pay drastically different fees. 

Institutional shares classes: What investors need to understand about different share classes before investing in mutual funds

I hate surge pricing. It is the most brutal when I most need that ride, or when I’m drenched from head to toe from the sudden downpour.

Surge, or dynamic pricing, has become pretty efficient for all modes of transportation. If you have not yet booked your Chinese New Year getaway, that flight to Phuket is now 4x the normal price, not to mention the surging hotel prices too.

We live in an increasingly efficient world, where we can pay huge premiums for the same experience because of the almost immediate reflection of the laws of supply and demand in price.

It seems rather unfair, but it works in our capitalist world.

Mutual fund (unit trust) investing is similar yet different. We get the same experience but could pay drastically different fees.

Even more annoyingly, this is due to sales incentives rather than the laws of supply and demand.

You could be investing in the same fund as your friend, but paying different fees because you’ve invested in different share classes. The funds’ objectives and underlying investments are the same across all the share classes and managed by the same fund manager, but each share class has a different fee (expense ratio) and perhaps minimum investment requirement.

To make it even more confusing, the bank or broker that you buy the fund from may also only be able to offer you certain share classes, depending on the distribution agreement that they have with the fund house, or their internal rules to maximise on sales commissions (trailer fees).

Read more: A guide to getting ripped off: a dictionary on mutual fund fees

Mutual funds commonly have several share classes, but these can generally be categorized into retail or institutional share classes. For example, let's say there is a mutual fund called Singapore’s Money Making Fund (MMF) with the following share classes:

  • Class A is a retail share class with a minimum investment amount of $1000, and a total expense ratio of 2%.
  • Class B is a retail share class with a minimum investment amount of $5000, and a total expense ratio of 1.7%. 
  • Class I is an institutional share class with a minimum investment amount of $10,000,000, and a total expense ratio of 0.5%.

There is no naming convention for mutual fund share classes in Singapore, so you need to read the Prospectus and Product Highlight Sheet carefully to get a better understanding of which share class you are investing in.

The institutional clean share class carries the lowest fees (total expense ratio) of the different share classes of the same fund. Why is there a significant fee difference between the retail share classes and the institutional share class?

The answer lies in sales incentives. One of the key differences between institutional and retail share classes is the trailer fee, which is embedded in the total expense ratio of a retail share class. This is essentially a sales commission that is paid on a recurring basis by the fund manager to the distributor/banker/broker that sold you the fund. This includes popular online fund distribution platforms.

Because of its lower fees, the institutional clean share class inevitably generates the highest returns of the different share classes. Unfortunately, there is usually a high minimum investment amount required to invest in the institutional share class, which is typically around $10,000,000. The institutional share class is usually targeted towards pension funds, hedge funds or large family offices.

Fees matter, a lot: a reminder that a difference in fees of 1% equates to over 300% of return difference after 30 years (assuming a global stock market return).

At Endowus, we believe that all investors deserve access to the best investment products at the lowest cost possible. This is why we built our portfolios on best-in-class institutional share class funds, which are now available to retail investors with a minimum investment of $10,000.

If you enjoyed reading this article from The Know, you can subscribe to our weekly newsletterFollow us on LinkedIn or connect with us on Facebook as we bring you financial insights from endowus.


Goldman Sachs’s tactic in Malaysian fraud case: Smear an ex-partner (NY Times)

MacKenzie Bezos could become world's richest woman with divorce (Bloomberg)

Why China rents out its pandas (The Economist)


John Bogle made investors richer — and the financial industry poorer (Washington Post)

The U.S. and China are making Davos a mess for everyone else (Bloomberg)

Four Chinese tycoons just transferred US$17 billion of their wealth to trusts as government toughens up tax regime (SCMP)


Insurers tap startup platforms to open new distribution channels (Business Times)

Singapore home sales face a billion-dollar litmus test (Bloomberg)

CapitaLand's S$11b buy is big, but will it be beautiful? (Business Times)


Amazon ruined online shopping (The Atlantic)


TED: Approaching with kindness (PlayerFM // 52 mins)

Good to Know

The biggest technology failures of 2018 (MIT Technology Review)

Triathlons, ultramarathons and ambitious baking: why is modern leisure so competitive? (The Guardian)

How Hong Kong can solve its waste crisis and become the Silicon Valley of recycling (SCMP)

Our pets: the key to the obesity crisis? (BBC) 

Nike's new self-lacing basketball shoe is actually smart (Wired)

The real cost of cheap groceries (Fortune)

US shutdown: Canadian air traffic controllers send pizza to US workers (BBC)

These are the biggest risks facing our world in 2019 (World Economic Forum)


What Singapore-based investors need to know before investing in unit trusts or ETFs

November 25, 2018


 When it comes to investing, Singapore investors have plenty of options to explore since our country is one of the leading financial hubs in Asia. Experienced investors can choose to invest in a diverse range of stocks or bonds, directly on the Singapore Exchange (SGX).

Investors who prefer a more hands-off approach can also invest via their financial advisers, who will normally recommend unit trusts, also known as mutual funds, for them to invest into. Some financial advisers and more recently, “robo-advisors” may also recommend investing in a portfolio of ETFs.

Unit trusts and ETFs are funds that pool together money from different investors for a fund manager to invest, on behalf of the investors, in assets that they believe generate a return for the investors.

Before you decide to park your money in a unit trust or ETF, it’s important that you first understand some of their key characteristics. Doing so can help you identify the right funds to invest in.

Investment methodology
Every fund has an investment methodology. This methodology should communicate the approach that the fund managers will take for their investment decisions. For some funds, this could be something relatively straightforward, such as investing in the equities of the biggest 30 companies in a particular country or region or tracking a certain index.

Other funds may have their own investment philosophies, such as traditional active stock-picking, or systematic strategies.

For example, Dimensional Financial Advisors (DFA) is a global investment manager that believes that the market is already able to do what they do best – reflect all available information into prices. DFA takes a systematic approach to investing and focuses its efforts on creating more value for its clients through its evidence and financial science-based construction of portfolios, delivered in a cost-efficient manner. They systematically tilt their portfolios to buy more stock of companies with certain characteristics, such as smaller size, value, or profitability. They do so because scientific research has shown that they are the only three proven factors of return that improve returns over the long term. They also believe this is an approach they can stick to, even during challenging market environments.

When you invest in a fund, it’s important that you know and understand the investment methodology of the fund and the track record of the fund managers running it. This methodology has to resonate with you. Otherwise, you will be investing in something that does not make sense to you, and when markets become volatile, you may struggle to stay invested

What the fund is investing in
There is a common misconception among new investors that investing into a unit trust or ETF means you are automatically building in broad diversification for your portfolio. This is not always true. You need to have an overview of what your fund is going to invest in. Typically, this can be segmented into a few key areas:

Location: The area or region the fund invests in. For example, the fund could invest globally or in only developed markets, or focus specifically on regions such as the US or Asia, or just single countries like China or India.

Sectors or themes: The industries the fund can invest in (i.e. technology or healthcare) or thematic funds (i.e. ageing or automation). 

Asset classes: Some funds invest strictly in equities only. Some funds invest in bonds or commodities. Others take a balanced portfolio approach, with a mix of both equities and bonds for example.

These are just a few broad areas that you should consider before investing in a fund. You should invest in unit trusts and ETFs which hold assets that you are comfortable owning.

You choose the fund, but the fund manager chooses the underlying investments
This simple statement is one that defines what investing in a fund is all about.

When you invest in funds, what you are essentially doing is choosing the fund managers, instead of the actual individual investments. The fund managers then choose what to invest your (and all the other investors’) money in. Even fund managers managing passive index-tracking ETFs will make active decisions in choosing a sample portfolio of securities to best replicate the underlying benchmark, because it may be too costly to mimic underlying indices entirely.

It’s ironic that many new investors do not pay enough attention to who is managing their money. If people who invest directly are already doing so much research on the assets that they are putting their money into, shouldn’t we be doing as much research on the individuals whom we are entrusting our money to?

When you park your money with fund managers, don’t take it for granted that all funds are equal. You should try to find out as much as you possibly can about the fund and the fund managers. Remember, they are the ones responsible for investing your money and making a return for you.

The fees you are paying
You invest because you want to generate a return and grow your wealth. However, if you invest through a unit trust or ETF, you will also incur an annual management fee (also known as the fund’s total expense ratio). Naturally, these fees eat into your investment returns.

New investors sometimes ignore small differences in management fees, thinking that the difference of 0.5% or 1.0% per annum doesn’t really matter. This is wrong.

Consider the example of an investor who invests $100,000 today and earns a return of 7% per annum for the next 30 years. Here’s how his returns will be impacted by just a small increase in fund management fees:

  • Scenario 1: Fund A charges him a management fee of 1.0%. After 30 years, his portfolio is worth $574,349. He would have paid a total fee of $84,801.
  • Scenario 2: Fund B charges him a management fee of 1.5%. After 30 years, his portfolio is worth $498,395. He would have paid a total fee of $116,129.
  • Scenario 3: Fund C charges him a management fee of 2.0%. After 30 years, his portfolio is worth $432,194. He would have paid a total fee of $141,521.
The management fee is just one type of fee that you pay. For unit trusts, other common fees include initial sales charges, payable when you first invest, wrap fees, as well as redemption charges, which may apply when you redeem units. For ETFs, you will be charged a brokerage fee when you buy or sell. All these additional costs will eat into your investment returns.

In the example above, you can see that a difference of 1.0% per annum in management fee works out to be more than $142,000 difference in returns over a 30-year period. This is based on an initial investment of $100,000 and a return of 7.0% per annum. If the investment is larger and the returns are higher, the fees will be higher as well.

Invest wisely
At endowus, we believe that for long-term, buy-and-hold investors who do not need intra-day trading liquidity, it may be more effective to invest in unit trusts which trade at NAV, rather than trying to time the market when you invest in ETFs and  potentially paying more than what the underlying assets of the ETF are worth.

At the same time, we believe in keeping our costs low, so that our clients keep more of their returns. Our all-in Access Fee is from 0.25% to 0.60%, depending on your assets under advice. This all-in Access Fee includes advice, investment, rebalancing, transfer and brokerage, all at a fraction of the industry average. On top of this, you pay a fund-level fee of between 0.50% to 0.56%, which is charged by the fund managers out of the fund’s daily NAV.

If you enjoyed reading this article from The Know, you can subscribe to our weekly newsletterFollow us on LinkedIn or connect with us on Facebook as we bring you financial insights from endowus.

An inconvenient truth - tax on US-listed ETFs.

September 29, 2018

Tax, if not careful, can shoot low-cost investing in the foot.

“In this world nothing can be said to be certain, except death and taxes.”
- Benjamin Franklin
Why US-listed ETFs are not necessarily cost efficient for you and me.

If you are like us, cost-conscious and a non-US person, US-listed ETFs are probably a bad idea. A caveat to this is that we are by no means tax experts, but we do understand the enormous effect of cost on investment returns. For this reason, tax cannot be ignored.

Yes, they are liquid, “cheap”, heavily marketed, used by robo-advisors all over the world, and in general great products...but not for non-US persons.

This may strike you as a surprise, but there are taxes that simply cannot be ignored, changing the “cost” quite drastically, especially when the ETF invests in non-US assets.

Let’s say you want to have exposure to emerging markets. The lowest cost, “cheapest” exposure you can get is Vanguard’s US-listed VWO, which has an expense ratio of 0.14%. VWO is so popular that it now has over US$80 billion in assets.

VWO also has a ~2.5% dividend yield, and therein lies the problem. As a Singapore or Hong Kong-based investor with no US tax treaty, there is a dividend withholding tax of 30% levied at the fund-level because it is a US-listed ETF, even though its underlying assets are not in the US.

Furthermore, if your country of residence does not have tax treaties with the underlying countries where these dividends are sourced, your effective dividend withholding tax could be even higher (underlying country tax plus the 30% US-imposed tax on top).

For reference, here is the list of countries that have tax treaties with  Singapore and Hong Kong, which may only get your tax down to 30% in the best case.

The “cheap” 0.14% expense ratio ETF has now grown to a cost of at least >0.85%. This ETF has now become pricey.

That is not even the end of it. Let's say you are holding a basket of US-listed ETFs when you pass away. No matter where those ETFs were invested, your US-listed assets (ETFs included) would be legally subject to up to 40% draconian US estate tax.  As an example, if you lived in Singapore and had $1,000,000 in a US-listed ETF that only invested in China, you would be liable to pay an estate tax of up to $400,000 to the US government. That does not seem right at all.

Thankfully there is a better way for us non-US persons to invest: UCITS.

UCITS (Undertakings for Collective Investments in Transferable Securities) began in 1985 as a regulatory framework to make cross boarding distribution of investment funds in the EU and beyond compliant, transparent, and with stronger protections for investors.

Today, there are thousands of UCITS funds listed by global fund managers such as Vanguard, Dimensional, Blackrock, PIMCO, etc., making their strategies available to global investors in a more tax efficient manner. Sticking with the emerging markets example, Vanguard’s emerging markets UCITS fund and ETF have a cost of  0.27% and 0.25% respectively. As compared to the US-listed ETF, they are far cheaper, taxes considered.

When investing in funds, there are three levels of taxes to consider:

  1. Portfolio-level: this is tax due by the fund for holding, receiving dividends/income on the underlying securities. This is generally the same for UCITS and non-UCITS funds.

  2. Fund-level: this is tax due by the investor to the fund depending on fund structure. For US-listed ETFs, this is 30% on income and dividends unless your country has a tax treaty with the US, which Singapore and Hong Kong do not. For Ireland UCITS funds and ETFs, this tax rate is zero.

  3. Investor-level: this is dependent on each investor’s individual tax status, typically based on your country of residence. For those of us individual investors in Singapore, this is zero.

At the end of the day,  it may be hard to avoid owning any US-listed securities in your portfolio. The US makes up over 50% of the MSCI All Countries World Index, which is one of the most widely used benchmarks for global equity portfolios. The liquidity and depth of the US market may trump the potentially onerous tax obligations, but there are alternative structures such as UCITS funds and ETFs that you can consider to get the exact same US exposure in a more tax efficient manner.

Tax, if not careful, can shoot low-cost investing in the foot.

You may be forgiven for not knowing about the implications of US withholding tax like so many others, but if some of your hard-earned savings are taken by the US tax authorities without you knowing it, then ignorance is definitely not bliss.

If you enjoyed reading this article from The Know, you can subscribe to our weekly memoFollow us on LinkedIn or connect with us on Facebook as we bring you financial insights from endowus.
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Masayoshi Son, SoftBank, and the $100 billion blitz on Sand Hill Road (Bloomberg) 

China and America may be forging a new economic order (The Atlantic)

Is China’s infrastructure boom past its peak? (The Economist)


Don’t take asset allocation advice from billionaires (A Wealth of Common Sense)

Your reaction to big market events depends on whether you lived through it. (Of Dollars And Data)

How the yuan sets the tone in currency markets (The Economist)


Low cost portfolios get you a headstart, says endowus (Business Times)

5 reasons why the world's tech firms are moving to Singapore (Forbes)

Why Facebook bet US$1 billion on Singapore data centre (SCMP)


Mohamed A. El-Erian: Nine lessons from the Global Financial Crisis (Bloomberg)

The LeBron James of short-selling talks Ponzinomics (Institutional Investor)


How to stop being a loser (Freakonomics // 60 mins)

Good to Know

Hong Kong billionaire offers ‘Nobel Prizes’ with double the money (Bloomberg)

The untold stories of Paul McCartney (GQ)

Amazon wants to be in every room of your house (Slate)

A shocking number of killers murder their co-workers (The Atlantic)

Everything you know about obesity is wrong (Huffington Post)

The Nissin instant noodle story: From garden shed to national treasure to outer space (SCMP)

Would perfect memory be a burden or a superpower? (Gizmodo)


Spoilt for choice: ETFs vs Mutual Funds

September 7, 2018

Selection, strategy and portfolio construction aside, how do we answer the initial question: ETF or mutual fund (aka. unit trust)?


You walk into a restaurant, get seated, and you’re handed a book. It’s the menu masquerading as an encyclopedia  - page after page, there are so many items to choose from that you can’t decide what to order.

From menu items to dating partners to investment options, we think that the more choices we have the better. The truth is, too many choices often leads to decision paralysis.

Asset manager giant Blackrock, for example, offers 342 U.S listed ETFs alone. They have 92 U.S. equity-focused ETFs slicing and dicing the market in every which way. A more obscure one we found on the list: iShares North American Tech-Multimedia Networking ETF.

ETFs have become synonymous with passive index funds, but this is a great misconception.

Adding to the permutation of possibilities, there are many financial services firms now offering portfolios of ETFs they have selected, then actively trading those portfolios, creating a whole new can of worms.

Selection, strategy and portfolio construction aside, how do we answer the initial question: ETF or mutual fund (aka. unit trust)?

Both ETFs and mutual funds pool investors’ money, which becomes part of a fund that invests in different assets. Both can be great tools to help you build a diversified portfolio with just a single investment, but there are important differences between them that you should understand before you decide which investment is right for you.

Do you want to trade frequently?

ETFs are priced and traded on stock exchanges throughout the day, just like stocks. You can set price limits or market orders when you trade ETFs. Depending on the liquidity of the ETF, the bid/ask spread can be narrow or very wide. In contrast, units of mutual funds are invested or redeemed directly with the fund management company via a bank or broker. The price (or more commonly referred to as NAV) is set once a day, and everyone who puts in their order before a set time each day will have the same day-end NAV.  

For a long-term investor, the intraday liquidity of ETFs is of little importance. Trading at NAV versus unsuccessfully trying to time the market and potentially paying more than what the underlying assets of the ETF are worth is comforting.

You should want to pay less in fees.

People look at ETFs and think “cheap!”, but this is not always the case.

You pay a brokerage fee to trade ETFs. Depending on your broker, this could range from a few dollars to over 0.50% on your investment amount.

For mutual funds, depending on your distribution channel, fees can vary widely.  The lack of transparency has given mutual funds a deservedly bad reputation. You need to read the fine print and ask your broker exactly what fees are involved: There is an upfront sales fee, and potentially wrap fees, brokerage fees, switch fees, and redemption fees. Worst of the lot is hidden trailer fees embedded into the fund, which are essentially sales commissions paid on a recurring basis by the fund manager to the distributor (Read "A Dictionary on Mutual Fund Fees" here). These fees can take a massive bite out of your returns so you should not blindly accept them.  

We at endowus are greatly opposed to these complicated layers of fees and misaligned incentives, which is why we charge a transparent and low all-in access fee (no additional sales fee, brokerage fee, rebalancing, or wrap fees) and we never take kickbacks from fund managers or anyone else for that matter.

Though the expense ratios of ETFs are generally lower than mutual funds, this isn’t always the case. There are mutual funds (such as those offered by Dimensional Fund Advisors) that provide additional value such as efficient implementation, and therefore generate returns at costs comparable to ETFs.

For example, let’s look at 2 UCITS funds, which are more tax-efficient for the non-U.S. person. Dimensional's World Equity mutual fund invests in almost the entire world with over 10,000 securities and has a fee of 0.50% p.a. Blackrock’s iShares All Country World ETF, on the other hand, has under 1300 securities and a fee of 0.60% p.a. Furthermore, Dimensional’s fund has a share-class denominated in SGD,  which means that you would avoid unnecessary foreign-exchange related costs that you might have to incur if you are a SGD-denominated investor trying to invest in foreign-listed ETFs.

This is your hard-earned money. Do the work and look hard. There are solutions out there that suit your needs.

Admittedly choosing the right mutual funds can take more work: fees are not as transparent, fund manager selection can be difficult and time-consuming. This does not mean you should write them off across the board and just accept that ETFs are the only way to go, as there are ways to access the best-in-class mutual funds.

We think the right way to build your portfolio is to take a more holistic view and first determine your asset allocation and risk tolerance, then select the investments as a way to express that view. We’re agnostic between using ETFs and mutual funds to build our portfolios. Rather, we believe in taking an evidence-based approach to finding the best instruments available for your portfolio.

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The best mutual funds for investors: Cheap and boring (Barrons)

Passive, aggressive: Asset managers get involved in the companies they own (The Economist)

How to retire in your 30s with $1 million in the bank (NY Times)


The world has not learned the lessons of the financial crisis (The Economist)

Dear investor, that cocky voice in your head is wrong (WSJ)


Facebook to build $1 billion data center in Singapore (Fortune)

How Uber, valued at billions, was sent packing by a start-up in Singapore (Channel News Asia)


The real Goldfinger: the London banker who broke the world (The Guardian)

How AI-generated music is changing the way hits are made (The Verge)


How I built this with Guy Raz: WeWork (NPR // 53 mins)

Good to Know

These are the world’s laziest nations (Bloomberg)

Who needs democracy when you have data? (MIT Technology Review)

Why you should surround yourself with more books than you'll ever have time to read (Inc)

Robinhood, the zero-fee stock and crypto trading app, is planning to go public (Fortune)

Images of the destruction left by Typhoon Jebi in Japan (The Atlantic)

5 minutes that will make you love classical music (NY Times)

Are 'swipe left' dating apps bad for our mental health? (BBC)

The avocado toast index: How many breakfasts to buy a house? 

 Source: BBC

Why faster Internet and bond ETFs may not be good for you

July 6, 2018

If you scratch beneath the surface, it’s not all rosy in the world of bond index ETFs. There are structural challenges in investing in bonds passively


Do you remember what life was like prior to high-speed internet? I re-watched You’ve Got Mail recently and was reminded of the torturously slow modem beeping and screeching its way onto the Internet. Meg Ryan was overly excited to hear the antiquated notification “You’ve Got Mail” when one email arrived, but nowadays your inbox is so inundated with emails that you’re only excited if it isn’t a bill or spam.

What was life like prior to the invention of bond ETFs? Well, unlike stocks, bonds were off-limits to the average investor. The minimum size of bond purchases was US$100,000 or more, which excluded small investors from investing directly in the bond market. Individual bonds were traded directly between broker-dealers and large institutions, and this meant that prices were much less transparent than stocks, which are traded on public exchanges. The over-the-counter nature of the bond market favoured larger and more sophisticated investors.

Life post bond ETFs: passive bond indexing and the introduction of bond ETFs have levelled the playing field for you and me. Bond ETFs can be traded like stocks on an exchange, which means that their prices are more transparent compared to individual bonds. We can choose to get broad-based exposure to the bond market by tracking major benchmark indices such as the Bloomberg Barclays Global Aggregate Index, or narrower segments of the market such as short-term German government bonds.

Unfortunately, if you scratch beneath the surface, it’s not all rosy in the world of bond index ETFs. Just like how having faster internet has caused us to spend too much time surfing Instagram, there are certain structural challenges in investing in bonds passively through index ETFs.
  1. Size and complexity of bond market: There are ~344,000 securities in the bond market compared to ~14,400 in the stock market for the representative global index. Due to the size and complexity of the bond market, passive ETFs will invest in an optimized sample of securities as full replication of the underlying benchmark is not practical or cost-effective. For example, the Bloomberg Barclays US Aggregate Index includes more than 10,054 securities while the leading ETFs that track the index include only ~29-73% of those securities. Passive fixed income ETFs are actually making active decisions daily to replicate its benchmarks.
  2. Buying more of the worst: Just like in equities, bond indexes are typically market capitalization-weighted using the outstanding market value of bonds. This makes sense in equities where large index-weighted companies also tend to also be the largest and most successful companies. However, in bond indexes, the companies with the highest amount of debt have a higher weighting. This means you are holding more of a company’s debt as it becomes more leveraged - it’s essentially buying more of the worst.  
  3. Finite life of bonds: Bonds have a maturity date, which means that there will constantly be bonds maturing and new issues launched, compared to the perpetual nature of stocks. As a result, bond indexes are reconstituted more often which creates higher transaction costs.
  4. Illiquidity: Parts of the bond market are illiquid and may not trade for days or even months. Smaller bond issues may not have an active secondary market. Bonds also become more illiquid as they approach maturity. This again leads to higher transaction costs and makes it more difficult to replicate an index. 
  5. Lag in credit ratings: Bond indexes use official credit ratings from rating agencies such as S&P, Moody’s and Fitch, to categorise bonds in sub-asset classes (i.e. AAA, AA, BBB, etc, investment grade or high yield). There is often a lag in the rating agency’s upgrade or downgrade of a bond versus the underlying issuer’s change in credit fundamentals, whereas the market is well-ahead in pricing it in. This means that the passive index fund will buy or sell bonds late in the game.

Industry research has focused on the argument for passive over active in the equities space. Not much discussion has revolved around whether investors enjoy the same benefits of passive investing in the fixed income space. Bond ETFs have democratized access to an asset class that was previously hard to for the average investor to invest in, but there are inherent structural challenges in passive bond investing. Passive funds for many fixed income categories have consistently wider tracking error and underperformance versus their respective benchmarks, especially when compared to passive equity funds or ETFs. In fact, historical performance shows that certain active managers have consistently been able to beat benchmark returns over the long-term. The number of active managers who beat the benchmark is significantly higher for fixed income than in equities. Just like having faster broadband access doesn’t necessarily lead to higher productivity in your life, access to the bond market through bond index ETFs may not be the solution to our investment problems.

Subscribe to be in The Know



Sorry Wall Street, Airbnb doesn’t need your money (Bloomberg // paywall)

Sustaining wealth is harder than getting rich (A Wealth of Common Sense)

A $6 billion China startup wants to be the Amazon of health care (Bloomberg // paywall)

Apple is rebuilding maps from the ground up (Tech Crunch)


Hockey players - and asset managers - once could hip-check their way through a game (Institutional Investor)

The ghost of tech stocks past (The Irrelevant Investor)

Stephen Roach: When politics trumps economics (Project Syndicate)


New housing curbs expected, but extent of measures ‘heavy-handed’ (Channel News Asia)

A snapshot of Singapore’s fintech scene (TechInAsia)
Southeast Asia becomes a target for China technology companies (SCMP)


FAANGs v BATs: America’s tech giants vie with China’s in third countries (The Economist // paywall)


Ray Dalio: Principles and Algorithms for Work and Life (a16 // 49 mins)

Good To Know

How Atul Gawande landed the most extraordinary (or impossible) job in health care (Stat)

How to get away with financial fraud (The Guardian)

Tech start-ups push to make China’s facial recognition systems part of daily life across Asia (SCMP)

How going for a run changes your brain (Big Think)

The annoying genius who makes the World Cup worth watching (The Atlantic)

Made $650 million? Here’s how to keep it (The Big Picture)

Red-hot planet: All-time heat records have been set all over the world during the past week (Washington Post)

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Change is the only constant in life

June 15, 2018

‘Passive’ and ‘index fund’ are usually joined at the hip, but in reality, the underlying components of an index fund are far from passive...


AP Photo/Evan Vucci

Trump and Kim: from ‘totally destroy’, to ‘new relations’ and a 13-second handshake. The only thing constant in our world is change.

In the media, ‘passive’ and ‘index fund’ are usually joined at the hip, but in reality, the underlying components of an index fund (ETF or unit trust) are far from passive. The index components are operating companies, and as operating companies are run by humans: the companies do things like merge, privatize, go bankrupt, or buy back their own shares. Big companies shrink and small companies grow. New companies float on the market and the indexes that the tracker funds are meant to track change. If you were truly passive and did nothing at all, your holdings would cease to resemble the market.

In 2015 alone, the S&P 500 saw 24 changes in its constituents (Bold = added; Italics = removed)

  • January: Endo International (ENDP), HCA Holdings (HCA)Covidien (COV). Safeway (SWY).
  • March: Skyworks Solutions (SWKS), Henry Schein (HSIC), Equinix (EQIX), SL Green Realty (SLG), Hanesbrands (HBI), American Airlines Group (AAL)PetSmart (PETM), CareFusion (CFN), Denbury Resources (DNR), Nabors Industries (NBR), Avon Products (AVP), Allergan (AGN).
  • April: Realty Income (O)Windstream Holdings (WIM)
  • June: Qorvo (QRVO)Lorillard (LO).
  • July: Baxalta (BXLT), J. B. Hunt Transport Services (JBHT), Columbia Pipeline Group (CPGX), Advance Auto Parts (AAP), PayPal (PYPL), Signet Jewelers (SIG)QEP Resources (QEP), Integrys Energy Group (TEG), Allegheny Technologies (ATI), Family Dollar Stores (FDO), Noble Corp (NE), DirecTV (DTV).
  • August: Activision Blizzard (ATVI)Pall Corp (PLL).
  • September: United Continental Holdings (UAL)Hospira Inc (HSP).
  • October: Verisk Analytics (VRSK)Joy Global (JOY).
  • November: Hewlett Packard Enterprise (HPE), Synchrony Financial (SYF), Illumina Inc (ILMN)Hudson City Bancorp Inc (HCBK), Genworth Financial Inc. (GNW), Sigma-Aldrich Corp. (SIAL).
  • December: CSRA Inc (CSRA), Church & Dwight Co (CHD)Computer Sciences Corp. (CSC), Altera Corp. (ALTR).

Unless you are day trading, you most likely had fewer than 24 changes in your portfolio holdings in 2015.

Unfortunately with all this change (which the industry calls index reconstitution), the index funds are constantly having to play catch-up. Index tracker funds are forced to buy or sell these securities to minimize tracking error (deviation from the benchmark index returns). The turnover cost can be split into two: brokerage costs and market impact. We’ll focus on the latter as brokerage costs should be minimal for large index providers.

Index reconstitution is generally announced ahead of time to allow fund managers to rebalance their portfolios. But as you can imagine, there will be a great demand for securities that are being added to an index, and pressure to sell securities that are being dropped from an index, even if there are no changes to the company fundamentals. Prices react predictably to the new supply-demand equation. On June 4th, it was announced that Twitter would replace Monsanto in S&P 500. The share price of companies being added to major indexes usually spike up, and this was no different. Twitter’s shares climbed in post-market trade after the announcement, and surged nearly 5% the next day.

In a paper published by New York University professor Antti Petajisto in 2010 on index turnover cost, he estimated that the annual turnover drag for the small-cap Russell 2000 was ~0.38%-0.77% and for the S&P 500 ~0.21%-0.28%. You can see that the cost is much more pronounced in higher turnover indexes that track less liquid securities. Index turnover for S&P 500 is relatively low, but this is not always the case. Small and midcap ETFs have higher turnover for example, because the companies have a higher propensity to be bought out or go out of business versus the large-caps sitting in the S&P 500. The index turnover cost will also be higher in emerging markets, more niche sectors, and bonds. We will focus more on the bonds space next month.

The rise of low-cost indexing has democratized access to capital markets and reduced the cost for all of us to manage our assets with meaningful diversification. Indexing has been so successful that you can now track everything from robotic companies to hedge funds. It’s great that you and I can now access parts of the market that would not have been available to us before, but it’s important to remember that index turnover costs for more niche strategies or markets can be significant. Interestingly, the number of indexes in existence today far surpasses the number of single securities: with 3,000 easily investable stocks, the number of possible combinations to turn into an index is a Googol, or 1 followed by 100 zeros. (Source: Bloomberg). Fees for index tracker funds with low turnover and more actively traded underlying components are reasonably low; but indexing is not, as many people believe, ‘basically free.’



Tears ‘R’ Us: The world’s biggest toy store didn’t have to die (Bloomberg)

Bitcoin’s price was artificially inflated last year, researchers say (NY Times)

It’s billionaires at the gate as ultra-rich muscle in on private equity (Bloomberg)


Why every investor should print out these charts and hang them on their wall (Marketwatch)

Why do stocks generally go up over time? (A Wealth of Common Sense)

Wall Street will struggle to manage China money (Bloomberg)

What a difference a decade makes (Morningstar)


Can Grab get its hands on more money? (Business Times)

Singapore may have gained over $700m in exposure as host of Trump-Kim summit (Straits Times)


The World Cup: What makes a country good at football? (The Economist)

The menace and the promise of autonomous vehicles (Longreads)


Malcolm Gladwell: McDonald’s broke my heart (Revisionist History // 75 mins)

Good To Know

Goldman Sachs used AI to simulate 1 million possible World Cup outcomes — and arrived at a clear winner (Business Insider)

Anthony Bourdain’s extreme empathy (The Atlantic)

Effective altruism: How to do the most good possible (The Economist)

Ivanka Trump cited a ‘Chinese proverb.’ China is confused. (NY Times)

NASA is learning the best way to grow food in space (Popular Science)

China is genetically engineering monkeys with brain disorders (The Atlantic)

How the Kardashians sold their terrifying sex glamazon look to the world (The Guardian)

The odd reality of life under China's all-seeing credit score system (Wired)

The hidden costs of investing in ETFs

June 1, 2018

The rise of low-cost ETFs has been a huge boon to investors, but it is important to understand some of the other more hidden transaction costs..

“Performance comes, performance goes. Fees never falter.” 
-Warren Buffett


We can’t all be better looking than average. And there is also no way all active fund managers can beat the market average. It is mathematically impossible.

The aggregate return of all market participants is equivalent to the market return, minus fees. The importance of fees, as a result, is paramount to your success in investing. This is where passive investing comes in - a way to gain broad exposure to the markets at a very low cost - and must therefore outperform most active managers in the long-run. This too is mathematically true, and it took the world long enough to realise.

“By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals. Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.”
- Warren Buffett

As a result, there has been a seismic shift out of actively managed investments and into passive funds.

The rise of low-cost ETFs has been a huge boon to investors and are a vast improvement compared to most of the higher-cost stock-picking funds out there. But it is important to understand some of the other harder to measure and more hidden transaction costs involved in investing in ETFs.

We are often fixated on the headline expense ratio when determining in which ETF to invest. This is of course the most immediately transparent fee  - it is what you will pay with certainty year-in and year-out when you hold an ETF. However, there are other costs to be aware of:

1. Tracking error
The difference between an ETF’s NAV performance and the performance of its underlying index can have some discrepancy. In a perfect world, the return of an index ETF would be equal to its benchmark net of fees. But in the real world, this does not always happen. For example, an ETF does not always mimic underlying indices entirely, as it can be extremely costly to mimic on a stock-by-stock basis if there are thousands of securities in the index. Instead, it invests in a sample portfolio of securities that is supposed to best replicate the underlying benchmark. This generally works fairly well, but we will see large tracking errors during periods of significant volatility or market reversals. Other factors that can chip away at an ETF’s performance as compared to its benchmark includes rebalancing costs and cash drag (cash held by the ETF provider as it tries to replicate the ETF's benchmark in the markets).

2. Market bid and offer spread
Like all stocks, ETFs have a market bid and offer price (i.e. bid price is the highest price a buyer is willing to pay, offer is the lowest price a seller is willing to accept). Ultimately, you have to pay the bid/offer spread if you want to cross that spread and complete a transaction. In popular ETFs that are traded with higher volumes (highly liquid ETFs), the spread is fairly narrow, but the less liquid the ETF, the higher the transaction cost you will have to pay.

Understand more: A helpful interview by Vanguard

Lastly, a not so hidden but still important cost to watch for is brokerage. One of the advantages of ETFs is that you can trade them intraday like stocks. If you trade ETFs actively (just like other securities), you will incur sizeable transaction costs and negate the low-cost benefits of investing in an ETF in the first place.

The bottom line is that costs matter. One of the advantages of ETFs is that they can be a low-cost way to gain market exposure, but the true cost of investing in an ETF goes beyond the expense ratio. Total holding cost of an ETF can vary across providers and is more complex than many realize. In many cases, low cost index funds and mutual funds, that have not been getting as much love in the last few years, can be a better option for the intelligent buy-and-hold investor.



Never mind the millionaires. Here’s advice from billionaires (Bloomberg)

Into the danger zone: American tech giants are making life tough for startups (The Economist)

How Amazon is using Whole Foods in a bid for total retail domination (Fortune)

Airbnb founders go it alone in China (Bloomberg)


What the world’s richest hedge fund managers earned in 2017 (Institutional Investor)

George Soros: How to save Europe (Project Syndicate);

Fidelity, bruised from crises, searches for life after mutual funds (NY Times)


So long, hipster havens: Singapore’s Brutalist past could soon be gone (The Economist)

Singapore has fintech dreams, but it's short on tech talent (Bloomberg)

South-East Asia: lots of elections, not so much democracy (The Economist)


How data and surveillance are transforming justice (The Economist)

How companies, governments, and nonprofits can create social change together (Harvard Business Review)


Nice game: In game theory, sometimes the best way to win, is to lose (NPR // 17 mins)

Does doing good give you license to be bad? (Freakonomics // 37 mins)

Good To Know

Silicon Valley’s bible is out, courtesy of Mary Meeker (Slate)

 Surviving prison as a Wall Street convict (Institutional Investor)

Is it really a Leonardo? Why the expert eye still rules the game of art authentication (Aeon)

The reporter who took down a unicorn (NY Mag)

Keeping up with the Joneses: Neighbors of lottery winners are more likely to go bankrupt (Bloomberg)

Avoiding meat and dairy is ‘single biggest way’ to reduce your impact on Earth (The Guardian)

How the midlife crisis came to be (The Atlantic)

We saw the future of consumption at Alibaba's new retail megastore in Beijing (Technode)

Survivorship bias -  Why you’re not seeing the full picture when it comes to fund management performance

May 18, 2018

Wouldn’t it be great if every time you made a poor decision in life, you could just rewind and erase it? Turns out - this actually happens in the fund


Tom Hardy in Dunkirk. Courtesy of Warner Bros.

Wouldn’t it be great if every time you made a poor decision in life, you could just rewind and erase it? Turns out - this actually happens in the fund industry. If a mutual fund performs poorly and shuts down, it’s booted from peer average calculations as you can no longer invest in it. The historical performance you’re looking at only reflects the ‘survivors’, which means that the average performance figures are probably rosier than they would be if the funds that crashed and burned were included.

Survivorship bias can be found everywhere.

  • During WWII, the British military wanted to learn how to best protect their planes from enemy gunfire. They focused on reinforcing areas of the planes that returned to base with the most bullet holes, as they reasoned that the bullet holes showed where these planes were getting hit. Hungarian mathematician Abraham Wald saw the fallacy in this - they should instead reinforce areas where the surviving planes weren’t getting hit. The planes could clearly survive a strike on those points riddled in bullet holes.
  • Long Term Capital Management (LTCM) was a hedge fund that nearly brought down the global financial system. A leading index of hedge fund data contained LTCM’s data prior to its collapse, which had an annualized return of 32.4% from inception in Mar 1994 to Oct 1997. This inflated the hedge fund industry’s overall results given LTCM’s size. LTCM stopped reporting data from Oct 1997 until its demise a year later, when the fund lost 91.8% of its capital and was eventually liquidated.

Perhaps it would not be such a big deal in the investment landscape if only a minority of funds closed down and this was just a marginal trend. Unfortunately, you may be surprised by how many mutual funds become obsolete over time.

*Winners are funds that survived and outperformed their benchmark over the period

Source: Dimensional Fund Advisors: Mutual Fund Landscape (IFA)

Survivorship bias can be quite significant for the long-term investor because it can distort performance figures. As you can see, less than half of the equity funds and 57% of the bond funds survived over the 15-year period. Taking into account all those funds that vanished would paint a very different picture from the ‘average’ fund returns. Vanguard published a research paper titled ‘The Mutual Fund Graveyard’, which concluded that ‘not accounting for closed funds can lead to a false perception of the probability of success.’ For example, for the five years ended December 31, 2011, 62% of surviving large-cap value funds outperformed their style benchmark. However, accounting for those funds that closed would reduce that percentage to just 46%.

This analysis swings our perception from optimistic about the ability to pick a fund manager who can beat their benchmark, to feeling cheated, with the odds no longer in our favor. We cannot analyze the planes that were shot down and decaying at the bottom of the ocean, but what we can do is be aware of survivorship bias and understand the limitations in looking at historical data when investing. 



Private equity’s plan to beat the low-cost investing robots (Bloomberg)

At Toys 'R' Us, a $200 million debt problem could lead to $348 million in fees (NY Times)

Inside Shanghai's robot bank: China opens world's first human-free branch (The Guardian)

Robinhood founders are billionaires in Silicon Valley minute (Bloomberg)


Little rice, lots of dough: Xiaomi eyes a giant Chinese IPO (The Economist)

For hedge funds, smaller is better (Institutional Investor)


Fintech battle pits biggest Singapore bank against China giants (Bloomberg)

Razer chose to list in Hong Kong. Has Singapore lost its competitiveness? (Channel News Asia)


How China's tech revolution threatens Silicon Valley (The Atlantic)


Tim Cook in Duke's commencement speech:"Be Fearless" (Big Think // 14 mins)

Has Tencent lost Its mojo? (Supchina // 17 mins)

Good To Know

A stunning, sudden fall for Najib Razak, Malaysia's 'Man of Steal' (NY Times)

Why age tends to work in favour of happiness (The Guardian)

The wisdom of running a 2,189-Mile marathon (The Atlantic)

This is Uber’s vision of the flying car (Recode)

This brilliant strategy used by Warren Buffett will help you prioritise your time (Inc)

‘China’s Hawaii’ looking for 1 million new residents, more than the population of Stockholm (SCMP)

The biggest surprises from the $833 million Rockefeller sale (Bloomberg)

Man used change of address form to move UPS headquarters to his apartment (NPR)

Less is more. Why In-N-Out works

May 4, 2018

I recently tried to shop on Lazada. I typed ‘cushion’ into the search box, and it returned 963,138 items.  Did I want the nautical stripes, flamingo..

-me, making easy decisions


I recently tried to shop on Lazada. I typed ‘cushion’ into the search box, and it returned 963,138 items. Did I want the nautical stripes, flamingo print or geometric shapes? I gave up after scrolling to page 3. All these choices and all these decisions - and all I wanted to do was buy one cushion.

Turns out, I’m not alone. More options do not always equal better choices and can often lead to inaction. There was a study done by Columbia Professor Sheena Iyengar on the effects of increasing the amount of choices for consumers. She set up a table displaying gourmet jam, and changed it periodically to either 6 varieties or 24 varieties. There were more customers intrigued by the larger selection, but when the time came for people to actually open their wallets, those who saw the smaller display were 10x more likely to buy jam.

Professor Iyengar found that the same phenomenon applied to investing in retirement plans. She discovered that when a US retirement 401(k) plan offered only 2 investment options, 75% of employees participated. But when 59 investment options were available, the participation rate dropped to 61%. Interestingly, for every additional 10 investment options available, the average 401(k) participant’s equity allocation fell by 3.28%. (Source: Business Insider)

Investing today comes with many choices. There are over 4000 ETFs and 8000 mutual funds globally, and that’s just a start. When you add in all the share classes, there are over 25,000 fund options. Logically it seems that we are better off being able to choose from thousands of funds - or cushion covers.

What we need is fewer, better investment options. Offering model portfolios and taking asset allocation decisions out of the hands of retirement plan participants has proven to be beneficial. In a study done by John Hancock Retirement Plan Services, they found that those who invested in a single asset allocation portfolio earned better returns on average than participants who picked individual investment options to build their own portfolios— by an average of 1.06% annually over 15 years. That is a 43% difference on a portfolio earning an annualized return of 7% vs. 8.06% for 15 years. (Source: Investment News)

This is the paradox of choice: The confusion and complexity that accompany extensive choices may actually hinder your investment portfolio. Fund supermarkets may argue that offering more products can help you build diversified, optimal portfolios. But when you have too many funds in your portfolio, it may start looking like an expensive index fund. Choosing from fewer funds doesn’t need to be limiting; we believe that you can create globally diversified, optimal portfolios through just a handful of well-picked products. Having curated investment options is a better solution - as long as they are provided by someone whose interests are truly aligned with yours.



Impress the algorithm. Get $250,000 (Bloomberg)

Goldman wants to trade bitcoins (NY Times)

Tesla doesn’t burn fuel, it burns cash (Bloomberg)


It's time to ditch our obsession with trade deficits. Here's why (World Economic Forum)

Is stock market volatility good for the art market? (Bloomberg)

Investors see largest ever decline in fund fees (Morningstar)


'Prostitute mansion': Is Singapore heading for Hong Kong style housing? (SCMP)

It's talent, not ideas, that turns on new incubators in Singapore (Business Times)

Singapore airport may use facial recognition systems to find late passengers (Reuters)


Financial inclusion is making great strides: Nearly a quarter of world’s population remains unbanked (The Economist)


The paradox of choice (TED // 19 mins)

Good To Know

Over 400 startups are trying to become the next Warby Parker: Inside the wild race to overthrow every consumer category (Inc)

Inside the mind of David Rockefeller, titan of art collecting (Artsy)

Artificial intelligence is cracking open the Vatican's secret archives (The Atlantic)

The complete timeline of Marvel cinematic universe movies, from ‘Iron Man’ to ‘Infinity War’ (The Wrap)

Inside Jeff Bezos’s DC life (Washingtonian)

The average guy who spent 6,003 hours trying to be a professional golfer (The Atlantic)

Facebook is taking on Tinder (The Verge)

Source: World Economic Forum

Ouch baby...very ouch

December 15, 2017

The car salesman has finally convinced you to join the Tesla cult. As you take your new Model S out for a spin, you’re asked to pay a 3% fee for the key (upfront fee), and another fee if you decide to sell the car (exit fee). Of course you expect to pay operating costs such as electricity, maintenance, insurance (expense ratio), but then you find out part of those operating costs are actually paid back to this salesman who sold you the car for as long as you own it (trail fee).

"The grim irony of investing is that we investors as a group not only don't get what we pay for, we get precisely what we don't pay for."

- John Clifton ‘Jack’ Bogle, Founder of Vanguard, which now manages US$4.5 trillion


The car salesman has finally convinced you to join the Tesla cult. As you take your new Model S out for a spin, you’re asked to pay a 3% fee for the key (upfront fee), and another fee if you decide to sell the car (exit fee). Of course you expect to pay operating costs such as electricity, maintenance, insurance (expense ratio), but then you find out part of those operating costs are actually paid back to this salesman who sold you the car for as long as you own it (trail fee). 

No one would buy Teslas if this actually happened. Why do you not hold your unit trust investments to the same standard? Do you know how much and to whom you are paying these fees?

Let's dive into the trail fee as it does sound rather odd. The trail fee is paid by the fund manager to the distributor on an ongoing basis for as long as you stay in the fund. This probably causes some natural self-interested behaviour on the part of the distributor, who will be incentivised to sell you funds that pay higher 'trails' (industry lingo).

Platforms which advertise ‘zero fees’ are too good to be true - they can likely charge ‘zero’ because they are getting paid handsomely (usually ~50% of the expense ratio) by the fund manager on an ongoing basis. This means that if your fund expense ratio is 2%, 1% is going back to the salesman, and you probably did not even know.

Just how big is the impact of an extra 1% paid in fees?

Lets assume you invested $100,000 in 2 funds that had the same 10% annualized return (a very good return) before fees. Fund A charged 2%/annum (paying 50% in trails) and Fund B charged 1%/annum (with no trails). After 30 years, Fund B would have earned you an extra $320,502. That is 321% of returns that you are missing out on. 

There are funds that do not pay trails, and we would urge you to find out how to get your hands on them. Vanguard and Dimensional are two fund managers we love as they refuse to pay trails out of principle. By avoiding trails, your expense ratio is paying for fees associated with return generation, the way it should be.

Ask your financial advisor for a full breakdown of your fees. You may uncover that you have been paying handsomely for those coffees and lunches. 


A Dictionary of Mutual Fund (Unit Trust) Fees:


  1. Upfront/subscription fees: Fees charged upfront by banks/financial advisors/brokers for selling you a fund (typically 2-5% in Singapore)
  2. Exit fees: Fees charged by banks/financial advisors/brokers for when you exit a fund position, usually within a given time from investment (typically ~1% in Singapore)
  3. Brokerage fees: Fees charged by banks, financial advisors or brokers for executing the transaction of a fund (this can be a set fee like $20 per transaction or a %-based fee, like 0.25% of the transaction size)
  4. “Wrap” fees: Annual fee charged by banks/financial advisors/brokers for use of their platform and/or investment advice (typically 0.20-1%)
  5. Expense ratios: Annual fee funds charge for fund expenses, including management fees, administrative fees, and operating costs. This is deducted from a fund’s net asset value (NAV), and accrued on a daily basis. (typically 1-2.5% in Singapore, but can range from 0.05-3.5% per annum depending on the fund)


  1. Trail fees: Fund managers pay the bank/financial advisor/broker who sold you the fund an annual fee, which comes out of the expense ratio of the fund and is typically around 50% of the expense ratio for funds that do pay trails.
  2. Trading costs: A fund’s total expense ratio does not account for trading costs incurred by the fund itself, such as brokerage commissions, bid-ask spreads, and market impact (a large order can move a price disadvantageously). It’s important to choose funds that actively try to minimize these costs through execution and managing turnover.



How 2017 became a turning point for tech giants (NY Times)

How digital tools and behavioural economics will save retirement (Harvard Business Review)

Why Google and Amazon keep Fidelity and BlackRock up at night (Bloomberg)

The most valuable companies of all time (Visual Capitalist // Below)


Putting a price on bitcoin (Economist)

Bought Apple stock in 1980? Held It? Don't brag (Bloomberg)


Singapore taxis' night at the museum (Bloomberg)

MINDEF to open computer systems to hackers (Channel News Asia)


China’s big brother: how artificial intelligence is catching criminals and advancing health care (SCMP)


Love at first sight? A study says it's probably just lust (How Stuff Works // 21 mins) 

Good To Know

Why beauty is not universal (Nautilus)

The world might be better off without college for everyone (The Atlantic)

China's selfie obsession (The New Yorker)

The power of negative thinking (The Atlantic)

Salma Hayek: Harvey Weinstein is my monster too (NY Times)