3 ways to manage your cash – suitable for all investors!

Equity markets have generally done well this year, with many indices approaching record highs. However, this strong performance has been accompanied by heightened uncertainty and increased market volatility, especially with the global tariff outlook still in flux. At the same time, global interest rates have moderated in recent months. Yet, despite such declining rates, high-quality income sources remain readily accessible to astute investors.

Amidst this backdrop, we highlight our top recommendations for cash management solutions. These options offer a compelling mix of (i) high credit quality; (ii) low risk; and (iii) liquidity, while still paying decent yields of around 2+% for SGD and 4% for USD. We think any investor – regardless of your preferred investment style - can benefit from managing their cash more strategically!

Who should consider cash management solutions?

Cash management solutions can be valuable to virtually all types of investors.

Equity investors may find it useful as a parking facility for them to lock in gains amidst all-time highs in many equity markets. Some of the cash management solutions listed below even offer same-day or immediate liquidity for investors to re-enter markets at a better time in future.

Fixed income investors may be drawn to cash management portfolios for their low risk and attractive yields. For USD especially, ultra-short-end yields are among the highest along the yield curve; you would need to take on much more duration risks to get yields (e.g. 10y USTs and longer) comparable with these short-end rates.

Nearly all investors can benefit from having a cash management portfolio as a rainy-day fund, earning higher interest rates than a typical savings account. The liquid nature of cash management portfolios (e.g. same-day / immediate liquidity benefits) can also help investors to stay nimble amidst choppy markets.

Three options for your cash management

First, our AutoSweep facilities are among the most liquid solutions out there, offering immediate liquidity for any investments on iFAST platforms. This includes stocks, bonds, ETFs, and Unit Trusts, and is hence suited for fast-moving investors who are looking for unparalleled liquidity to enter markets whenever they wish.

Second, our iFAST Enhanced Liquidity Funds (ELF) are also very liquid ways to manage your cash, with T+0 (same-day) settlement available for all iFAST ELFs. These ELFs all have similar primary objectives of preserving capital and providing a high level of liquidity, followed by looking for yield enhancement opportunities.

(Our AutoSweep facilities invest in 90% ELF + 10% cash. Cash is lower-yielding compared to ELFs, resulting in the ELFs having higher yields than the respective AutoSweeps.)

Third, investors may choose from the wide variety of money market, liquidity, and other short-duration bond funds on our platform. Funds within a cash-management portfolio should generally be very low risk in nature, but the exact choice and combination of funds can be tailored to meet each investor’s specific objectives. Read on for a detailed list of our recommendations!

Top funds to consider [SGD]

Our picks here remain unchanged from our last update. These funds generally remain best-in-class within their segments, and we see little reason to significantly deviate from these. We also provide examples of what a cash management portfolio can look like for different risk profiles.

LionGlobal SGD Money Market Fund (MMF) and LionGlobal SGD Enhanced Liquidity Fund are still two amazing funds to anchor your cash management portfolio. Each invests in a mix of high-quality sovereign and non-sovereign bonds (MMF has about 10% larger sovereign exposure). There is very little separating the two funds, and either would be a great pick for investors.

Fullerton SGD Cash Fund is one of our Recommended Funds and is also a strong pick. While we previously highlighted the differences in indicative yields compared to the two LionGlobal funds above, the actual performance has actually been fairly close, albeit still in the LionGlobal funds’ favour. We see this fund as a more ‘traditional’ money market fund, investing in a combination of Singapore government bonds and high-quality fixed deposits.

For yield enhancement, Nikko AM Shenton Short Term Bond Fund and United SGD Fund are strong short-duration bond funds for consideration. These have slightly longer durations (> 1 year) but are fairly low-risk in nature based on their average credit quality (BBB+ to A-) as well as their actual risk metrics (e.g. limited drawdowns). These funds work best as complements to the three core funds above, providing potential yield enhancements for a modest increase in risk. Their 3y returns have also outpaced that of the three funds (LionGlobal and Fullerton) referenced above, showcasing their ability to deliver on these higher yields.

iFAST SGD Enhanced Liquidity Fund offers a similar profile of decent yields for a low risk level. As before, the fund’s unique T+0 (same-day) settlement lets it stand out from the funds above, and is a great option for those looking to earn decent yields while maintaining a high level of liquidity.

Table 1: Top funds to consider [SGD]

Table 2: Examples of cash management portfolios [SGD]

USD: Our top picks for cash management

Our broad recommendations here remain unchanged, though we added one LionGlobal fund here. As with our SGD recommendations, we also provide examples of cash management portfolios with different risk profiles.

Our top three Money Market Fund picks to anchor your (USD) cash management portfolio are still BNP Paribas USD Money Market Fund, Amundi Funds Cash USD, and Fullerton USD Cash Fund. The Amundi fund is also our current pick in our Recommended Funds list. These three funds are neck-and-neck in terms of their overall returns and risk profiles - and any of these would be a strong addition to your cash management portfolio, and the ultimate choice depends on investor preference.

HGIF – Ultra Short Duration Bond Fund is still a great option for moderately aggressive investors looking for a yield enhancement over their core cash management holdings. This fund invests >50% of its portfolio in floating-rate bonds, allowing it to keep its duration exposure light (usually within 0.5 years). All holdings must also be investment-grade at purchase, helping to manage portfolio credit risks. We still think this is a good option for those capable of tolerating higher risks with the potential reward of slightly higher yields and returns.

LionGlobal Short Duration Bond Fund is an interesting pick for even more aggressive investors. This is a more conventional short-duration bond fund, with its duration closer to the 2-year mark. Its 3y returns are fairly comparable with the HSBC fund’s above, while its indicative net yield is also higher. However, this comes with downsides of a lower credit quality (currently A-, but has historically dipped to the BBB+ area), as well as a much larger maximum drawdown.

(You can also use this fund’s base SGD class for your SGD cash management portfolio, as its factsheet provides indicative yields separately in SGD and USD terms [instead of a single blended yield].)

Our in-house iFAST USD Enhanced Liquidity Fund, as with its SGD counterpart, continues to provide decent yields and strong liquidity while incurring little risk. Its T+0 settlement schedule is among the fastest on our platform, and is a solid choice for nimble investors.

Table 3: Top funds to consider [USD]

Table 4: Examples of cash management portfolios [USD]

Honourable mentions – no rush to swap out if you already have these

Finally, we include some interesting funds we came across that also have a decent track record relative to our recommendations above. We think these are still decent picks worth holding – no immediate need to swap them out for our recommendations above!

1. Eastspring SGD Cash Fund: This fund’s 3y performance is close to our SGD recommendations above, though its near-term 3m performance has lagged a little. The fund’s T+2 settlement schedule also makes it a little slower compared to Fullerton SGD Cash Fund and LionGlobal Money Market Fund.
2. CSOP USD Money Market Fund: This fund recently hit its 3y anniversary (since inception), and has established itself as a reliable Money Market Fund in this space. It has technically underperformed our recommendations slightly (~10bps) over the past three years, but with its strong indicative yields, we will be watching for a potential comeback in future updates.
3. Fidelity US Dollar Cash: This fund has a long-standing track record of consistency since 1993. We did not include it this time due to a tiny underperformance versus our recommendations above (<10bps) over the 3-year horizon. However, its recent performance has roughly matched its peers, and we would not be surprised if it emerges as a top contender in the coming months.
4. Allianz Global Floating Rate Notes Plus: Similar to the HSBC fund above, this Allianz fund also primarily invests in floating-rate bonds (though to a much larger extent). However, this fund does exhibit higher historical volatilities and drawdowns (3y) than the HSBC fund, making it suitable for investors who are comfortable with the associated risks.

Table 5: Fund metrics of our four ‘honourable mentions’ this time

Closing thoughts

Cash management products remain more important than ever. Short-end global yields may remain elevated as any future Fed cuts look to be gradual and modest. Uncertain and volatile markets today mean that flexibility is imperative, making high-liquidity products (AutoSweep and other T+0 products like iFAST ELF / Fullerton USD Cash Fund) even more attractive. We hope the article has given you more ideas on how to earn more yields on your cash!

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.