- Cash-like rates are expected to remain attractive for some time, especially when compared to those in the previous near-zero rates environment.
- We primarily recommend our various Auto-Sweep facilities, which serve as convenient one-stop portfolios with the highest liquidity for investments.
- Alternatively, we also provide suggestions on how investors can create their very own cash management portfolio tailored to their unique investment needs.
Shorter-tenor and cash-like products continue to provide decent returns today, anchored by the inverted Treasury yield curves in both Singapore and the US. This is boosted by the prospect of higher-for-even-longer interest rates which also means that cash-like rates are expected to remain attractive for some time, especially when compared to those in the previous near-zero rates environment.
With cash products still looking pretty attractive today, we take a deeper dive into some cash-like options for investors. We primarily recommend our various Auto-Sweep facilities, which serve as convenient one-stop portfolios with the highest liquidity for investments. Alternatively, we also provide suggestions on how investors can create their very own cash management portfolio tailored to their unique investment needs.
Auto-Sweep – A one-stop solution to park your liquid cash
The Auto-Sweep is a cash management account managed by iFAST on a discretionary basis, investing primarily in cash, money market, and short-duration bond funds. Currently, the Auto-Sweep accounts primarily invest in various bond funds – we list their allocations (as of 30 Sep) below:
- SGD Auto-Sweep: 35% Fullerton SGD Cash Fund, 25% LionGlobal SGD Enhanced Liquidity Fund, 25% United SGD Money Market Fund, 15% Cash;
- USD Auto-Sweep: 90% iFAST USD Enhanced Liquidity Fund, 10% Cash; and
- CNH Auto-Sweep: 90% iFAST-Lion CNH Enhanced Liquidity Fund, 10% Cash.
Liquidity is one of the key benefits of our Auto-Sweep facilities. Investors will face no lag time when using Auto-Sweep holdings to purchase other investments (including Unit Trusts, Bonds, Stocks/ETFs, and Managed Portfolios). In addition, our Auto-Sweep facilities come with no lock-in period - the redemption of SGD Auto-Sweep holdings into cash (i.e. not for direct investments) is on a T+1 basis, while redemptions of USD and CNH Auto-Sweep holdings are on a T+0 basis.
Other benefits of the Auto-Sweep include (i) no minimum balance requirement; (ii) attractive yields; and (iii) its ability to invest in institutional share classes of funds which typically are inaccessible to retail investors but come with lower expense ratios than retail share classes.
Taking these benefits together, we see Auto-Sweep as the premier option for investors looking for flexibility and liquidity while earning higher yields.
Three steps to construct your own cash management portfolio
Apart from the Auto-Sweep, investors can also customise their very own cash management portfolio! We recommend a simple three-step approach below.
1. Choose an anchor
Anchors are funds which aim to generate reasonable returns at relatively lower volatility, helping to act as a portfolio stabiliser. Our shortlisted funds typically have a platform risk rating of 0 to 1 and generally have lower risks compared to your average bond fund (Table 1).
Table 1: Suggested ‘Anchors’
| Fund | Duration (years) |
Yield to Maturity (%) |
Expense Ratio (%) |
Average Credit Rating |
Currency |
| Fullerton SGD Cash Fund* | WAM: 47 days | 4.01% | 0.15% | - | SGD |
| Fullerton USD Cash Fund* | WAM: 50 days | 5.54% | 0.31% | - | USD |
| LionGlobal SGD Enhanced Liquidity Fund |
0.22 | 3.93% | 0.42% | AA | SGD |
| Nikko AM Shenton Short Term Bond Fund |
1.01 | 5.53% | 0.41% | A- | SGD / USD |
| Source:
Fund factsheets and PHS, iFAST compilations. Data as of latest available
factsheets / data from fundhouses. *Both Fullerton funds provide a weighted average maturity (WAM) instead of duration. No average credit ratings as they primarily invest in deposits. |
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Fullerton SGD Cash Fund: This fund aims to provide investors with liquidity and a return comparable to that of the SGD Banks Saving Deposits rate. It primarily invests in SGD deposits with varying maturities of not more than 366 calendar days, with financial institutions which have a minimum short-term rating of F-2 by Fitch, P-2 by Moody’s, or A-2 by S&P.
Investors should note that there will be several changes implemented from 1 February 2024:
- The mandate of the fund will be explicitly expanded to include SG government-related bills, as well as non-deposit investments as defined in the MMF Investment Guidelines; and
- The fee waiver of the existing Class A share class will be cut by 6 bps (from 0.15% p.a. to 0.09% p.a.). Consequently, investors can expect the net yield to drop by a similar amount as well (given constant yields) following this change.
Fullerton USD Cash Fund: This fund aims to provide investors with liquidity and a return comparable to that of USD deposits. It primarily invests in USD deposits and non-deposit investments as defined in the MMF Investment Guidelines.
Investors should note that there will also be several changes implemented from 1 February 2024:
- The mandate of the fund will be explicitly expanded to include US government-related bills. It will also explicitly specify the deposits will have a maturity of not more than 366 calendar days (at most 10% in those exceeding 366 days but no more than 732 days).
- The management fee of the existing Class A share class will be increased by 4 bps (from 0.12% p.a. to 0.16% p.a.).
LionGlobal SGD Enhanced Liquidity Fund: This fund aims to preserve capital, enhance income, and provide a high level of liquidity by investing in a portfolio of high-quality debt instruments. It will maintain a weighted average portfolio credit rating of A- and a weighted average duration of around 12 months.
Nikko AM Shenton Short Term Bond Fund: This fund aims to preserve capital and liquidity while outperforming the 3M SIBOR. It primarily invests in a portfolio of good-quality short-term bonds and money market instruments. This fund is also available under CPFIS-OA and CPFIS-SA (for its SGD classes), helping it stand out from its peers above.
2. Add yield enhancer(s)
Yield enhancers aim to provide higher yields, though these typically come with higher credit risks as well. However, we caution against the inclusion of high-yield bond funds which may offer higher yields but often come with too much risk for a cash management portfolio. Accordingly, our shortlisted funds here typically have a platform risk rating of 2 to 3, providing a good balance between yields and risks.
Table 2: Suggested ‘Yield Enhancers’
| Fund | Duration (years) |
Yield to Maturity (%) |
Expense Ratio (%) |
Average Credit Rating |
Currency |
| Fidelity Enhanced Reserve Fund | 0.88 | 7.78% | 0.63% (SGD) 0.60% (USD) |
A | SGD / USD |
| Fidelity Global Short Duration Income Fund |
1.70 | 7.16% | 1.06% | BBB- | USD |
| LionGlobal Short Duration Bond Fund |
1.80 | 5.80% | 0.57% | BBB | SGD / USD |
| Maybank Enhanced Income Fund |
0.95 | 4.27% (SGD) 5.77% (USD) |
0.32% | A/A- | SGD / USD |
| United SGD Fund |
1.17 | 4.65% | 0.67% (SGD) 0.69% (USD) |
BBB+ | SGD / USD |
| Source: Fund factsheets and PHS, iFAST compilations. Data as of latest available factsheets / data from fundhouses. | |||||
Fidelity Enhanced Reserve Fund: This fund aims to provide an attractive level of risk-adjusted returns (income plus capital appreciation) from a portfolio of global debt securities.
Fidelity Global Short Duration Income Fund: This fund aims to provide income while maintaining an average duration not exceeding three years.
LionGlobal Short Duration Bond Fund: This fund aims to provide capital growth and income over the medium to long term, by investing in Singapore and international bonds, high-quality interest rate securities, and other related securities. It will generally invest in investment-grade bonds.
Maybank Enhanced Income Fund: This fund aims to preserve capital and maintain a high degree of liquidity while looking to provide a return comparable to short-term time deposits.
United SGD Fund: This fund aims to achieve a yield enhancement over SGD deposits by investing primarily in money market and short-term interest-earing debt instruments as well as bank deposits.
3. Mix and match
Investors can mix and match these anchors and yield enhancers to form a portfolio customised to their risk profiles and desired yields. In general, we encourage “riskier” portfolios to also have a greater variety of underlying products and fund managers for diversification purposes.
For a Conservative portfolio, we recommend allocating 80% of the portfolio to an “anchor” and the remaining 20% to a “yield enhancer”. For a Moderate portfolio, we recommend allocating 50% of the portfolio to an “anchor”, while the remaining 50% is split equally between two “yield enhancers”. Lastly, for an Aggressive portfolio, we recommend allocating 25% of the portfolio to an “anchor”, while the remaining 75% is split equally between three “yield enhancers”.
How our Auto-Sweep facilities and model portfolios can help you manage your cash
SGD options
We now take a closer look at our SGD Auto-Sweep, as well as some model SGD cash management portfolios, differing based on each investor’s risk profile (Table 3).
The SGD Auto-Sweep has a net yield of 3.203% (all yields are annualised unless otherwise stated). This parking facility stands out for its strong risk management (based on 3y annualised volatility) and consequently its broader risk-return ratio. Another key benefit of the SGD Auto-Sweep is its liquidity – it is a parking facility for investors eyeing entries into investment opportunities as they can use Auto-Sweep monies immediately for other investments (and just T+1 for redemptions). Auto-Sweep users can therefore benefit from its relatively low risk and relatively high liquidity, all while earning a decent yield of 3.203% (as of 25 Oct).
Our model Conservative / Moderate / Aggressive portfolios are expected to generate net yields of 3.88% / 4.23% / 5.06% respectively, higher than the SGD Auto-Sweep highlighted above. Our Conservative portfolio particularly stands out for its solid return, as well as significantly lower volatility and duration compared to the other model portfolios. However, we also note that these underlying funds have redemption schedules ranging from T+1 to T+4 and are less liquid than the Auto-Sweep. As such, we think that these model portfolios can serve as an attractive higher-yielding alternative for investors who do not require the same-day (for investments) or T+1 (for redemptions) liquidity of the SGD Auto-Sweep.
Table 3: Model SGD cash management portfolios
| Risk Profile | SGD Auto-Sweep | Conservative | Moderate | Aggressive |
| Constituents | 35% Fullerton SGD Cash Fund
25% LionGlobal SGD Enhanced Liquidity Fund
25% United SGD Money Market Fund
15% Cash |
|
|
|
| 3-year Annualised Return | 1.4% | 1.4% | 0.9% | 0.2% |
| 3-year Annualised Volatility | 0.1% | 0.3% | 0.6% | 1.1% |
| Return / Volatility | 14.1 | 9.7 | 6.2 | 3.0 |
| Max Drawdown (past 3 years) | N/A | -0.9% | -3.0% | -5.6% |
| Net Yield* | 3.203% (as of 25 Oct) | 3.88% | 4.23% | 5.06% |
| Duration (years) | 0.2 | 0.3 | 0.8 | 1.0 |
| Platform Risk Rating | 0.3 | 0.4 | 1.0 | 1.8 |
| Time required to use funds | Immediate for investments T+1 for redemptions |
Fullerton: T+1 United: T+4 |
Fullerton: T+1 United: T+4 LionGlobal: T+3 |
Fullerton: T+1 United: T+4 LionGlobal: T+4 Fidelity: T+3 |
| Source:
iFAST compilations. Data as of latest available factsheets / data from
fundhouses. *Inclusive of fund-level fees (e.g. expense ratio), but excludes platform fee. **Fullerton only provides an average maturity for their fund which we use for our duration calculation (will slightly overestimate duration). |
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USD options
We next take a closer look at our USD Auto-Sweep, as well as some model USD cash management portfolios, differing based on each investor’s risk profile (Table 4).
The USD Auto-Sweep was recently incepted on 3 July 2023 and has a net yield of 4.694% (as of 25 Oct). Once again, the USD Auto-Sweep stands out for its high liquidity as investors can use their USD Auto-Sweep holdings immediately for investments without a time lag, and can also redeem their monies with T+0 settlement.
Our model Conservative / Moderate / Aggressive portfolios are expected to generate net yields of 5.53% / 5.72% / 5.75% respectively, higher than the USD Auto-Sweep. However, these model portfolios are (similar to that for SGD) generally less liquid as well, with redemption schedules ranging from T+2 to T+4. As such, these model portfolios are best suited for investors looking for higher yields but do not require the same-day liquidity of the USD Auto-Sweep.
Table 4: Model USD cash management portfolios
| Risk Profile | USD Auto-Sweep** | Conservative | Moderate | Aggressive |
| Constituents | 90% iFAST USD Enhanced Liquidity Fund
10% Cash |
|
|
|
| 3-year Annualised Return | N/A (Portfolio launched on 3rd July 2023) | 0.7% | 0.6% | 0.4% |
| 3-year Annualised Volatility | N/A (Portfolio launched on 3rd July 2023) | 1.1% | 1.3% | 1.4% |
| Return / Volatility | - | 1.1 | 0.8 | 0.5 |
| Max Drawdown (past 3 years) | N/A | -8.0% | -7.9% | -7.7% |
| Net Yield* | 4.694% (as of 25 Oct) | 5.53% | 5.72% | 5.75% |
| Duration (years) | 0.5 | 1.0 | 1.0 | 1.2 |
| Platform Risk Rating | 2.7 | 2.2 | 2.3 | 2.8 |
| Time required to use funds | Immediate for investments T+0 for redemptions |
Nikko: T+2 Fidelity: T+3 |
Nikko: T+2 Fidelity: T+3 Maybank: T+4 |
Nikko: T+2 Fidelity: T+3 Maybank: T+4 LionGlobal: T+4 |
| Source:
iFAST compilations. Data as of latest available factsheets / data from
fundhouses. *Inclusive of fund-level fees (e.g. expense ratio), but excludes platform fee. **USD Auto-Sweep was only recently incepted and does not have 3 years of historical data. |
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CNH options
For investors looking to park their CNH monies, we recommend our CNH Auto-Sweep facility. At the moment, there are insufficient “anchors” and “yield enhancers” within the CNH space, making it difficult for investors to DIY their own portfolios. The Auto-Sweep facility is expected to generate a net yield of 2.029% (as of 25 Oct).
Final thoughts
Overall, our Auto-Sweep facilities and model portfolios continue to provide competitive yields compared to traditional cash parking facilities like bank fixed deposits (Charts 1 and 2). Both the Auto-Sweep and model portfolios come with (significantly) higher liquidity compared to fixed deposits as well.
Overall, our Auto-Sweep facilities stand out for their extremely high liquidity, as investors have access to same-day usage of cash for their various investments. The SGD Auto-Sweep in particular also has the added benefit of lower volatility. Investors who do not require same-day usage of their cash for investments and are chasing slightly higher yields can also consider DIYing their own cash management portfolios on our platforms.
Chart 1: SGD Auto-Sweep and model portfolios offer yield pickups over traditional alternatives
Chart 2: USD Auto-Sweep and model portfolios offer yield pickups over traditional alternatives
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