What is an evidence-based approach to investing?

Financial markets have historically rewarded long-term investors, and provided growth of wealth that has more than offset inflation. Over time, markets display efficient characteristics and investors are rewarded commensurately for the risks that they take. Taking an evidence-based approach to investing means analyzing empirical data and time-tested academic evidence, and applying it in a systematic manner rather than trying to speculate or outguess other market participants. The aim of evidence-based investing is to give you the highest probability of success in growing your wealth over the long-term.

We focus our efforts on building data-driven portfolios that are based on empirical evidence rather than cursory back-tested data. Academic research has identified certain drivers of returns, and we want to structure our portfolios to capture these drivers within a broad market exposure. We believe in creating diversified investment portfolios which generate the highest possible expected return for every level of risk taken by an investor. For Endowus this means continuously searching the investment universe for products that will improve risk-return tradeoff in our portfolios. We understand that costs involved dramatically affect long-term returns, and endeavour to both implement efficient trading execution and continuously lower fees for our customers by leveraging our collective scale to create cost synergies.

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