Cash management accounts have become increasingly popular and widely available with numerous platforms offering them.
Many of us likely understand the importance of investing. However, the funds we invest are usually earmarked for long-term expenses, such as for our retirement or children’s education, primarily because we can ride out short-term price swings and economic cycles affecting the value of our portfolio.
All of us will also have another bucket of funds meant for shorter-term savings and liquidity requirements. This could be for our i) emergency funds, ii) money set aside for an upcoming big-ticket expense such as a wedding, home renovation, or to purchase a car, and iii) money that we intend to invest periodically due to the volatile markets or until we find the right opportunity.
Ideally, we should still earn a relatively decent interest return on such funds. However, since we need to use these funds in the short term, we cannot afford to invest in stocks, only to see it dive 30% during a market crash. This is where cash management accounts enter – allowing us to earn an interest return on our shorter-term savings.
What Is A Cash Management Account?
Cash management accounts enable us to earn a decent interest return by taking on a small level of investment risk. Typically, funds that we park in a cash management account are invested in money market funds and/or short-term bonds.
In Singapore, a cash management account is typically offered by financial institutions that are not a bank, such as brokerages and investment platforms. Cash management accounts continue to offer us a high level of liquidity, allowing us to withdraw our funds with no lock-up. There is also no cap on the amount we can invest in them. However, it isn’t the same as putting our funds in a bank account as we cannot leverage on the extensive network of banks to withdraw money from ATMs or branches, or tap on payment services online or with a debit card.
It also isn’t the same as other tools such as fixed deposits, high-interest savings accounts or the Singapore Savings Bonds (SSB), as these are not exposed to investment risks. Often, there may also be conditions placed on such products. For example, many fixed deposits give us attractive interest rates on an initial amount of savings as well as lock in our funds for several months or even years. High interest rate savings accounts typically enable us to earn incremental interest returns upon fulfilling conditions that include crediting our salary, spending on our credit card, purchasing investment products and more. There may also caps on the amount of funds that can earn a higher interest rate. For example, the Singapore Savings Bond has a maximum cap of $200,000.
Cash Management Accounts In Singapore
There are around 10 established platforms offering cash management accounts in Singapore.
Besides cash, certain cash management accounts also allow us to invest our Supplementary Retirement Scheme (SRS) account funds. This allows us to receive tax relief while also earning a decent interest return on our funds.
Also, when we invest in cash management accounts, we need to understand that projected returns are exactly what it is – projected. This means actual returns may deviate. Nevertheless, the underlying funds that the cash management accounts are typically invested in short-term and safe debt securities.
Another thing to note is that unlike fixed deposits and bank deposits, our investments in cash management accounts are not protected by the Singapore Deposit Insurance Scheme (SDIC).
Endowus Cash Smart Secure
We can invest both our cash and SRS funds into this cash management account.
Returns
The projected returns for individuals investing in Endowus Cash Smart Secure is 3.5% to 3.8%. This is after taking into consideration that Endowus rebates trailer fees to investors, as well as the fund-level fee and Endowus’ fees.
Minimum Initial Deposit
While there is no minimum initial deposit for Endowus Cash Smart Core, we need to invest $1,000 into the Endowus platform, which also consists of its cash investment and CPF investment solutions.
Underlying Funds
Endowus Cash Smart Secure invests 50% of its funds in the Fullerton SGD Cash Fund and the other 50% in the LionGlobal SGD Enhanced Liquidity Fund.
As stated in its factsheet, the Fullerton SGD Cash Fund “intend to hold its assets primarily in Singapore Dollar deposits with eligible financial institutions with varying terms of maturity of not more than 366 calendar days.” It also states that up to 10% of its net asset value may be placed with eligible financial institutions exceeding 366 days but not more than 732 days.
LionGlobal SGD Enhanced Liquidity Fund invests “in a broadly diversified portfolio of high quality debt instruments.” It also states that it invests in debt instruments diversified across varying issuers and tenures while maintaining weighted average portfolio credit rating of A-.
Fees
Endowus Access Fee per year – 0.05%
Fund-Level Fees
The expense ratio is what we incur as a total each year. Note that Endowus also rebates trailer fees back to us, and states that the fund-level fees after this is 0.15% per annum.
Fullerton SGD Cash Fund:
- Expense ratio – 0.15%
LionGlobal SGD Enhanced Liquidity Fund
- Expense ratio – 0.31%
Endowus Cash Smart Enhanced
We can invest both our cash and SRS funds into this cash management account also on Endowus.
Returns
The projected returns for individuals investing in Endowus Cash Smart Enhanced is 4.1% to 4.5%. This is after taking into consideration that Endowus rebates trailer fees to investors.
Minimum Initial Deposit
While there is no minimum initial deposit for Endowus Cash Smart Enhanced, we need to invest $1,000 into the Endowus platform, which also consists of its cash investment and CPF investment.
Underlying Funds
Endowus Cash Smart Enhanced invests 50% of its funds in the UOB United SGD Fund and the other 50% in the LionGlobal SGD Enhanced Liquidity Fund. From this, we can understand that the UOB United SGD Fund is slightly riskier and hence provides a slightly higher projected compared to the Endowus Cash Smart Secured portfolio.
UOB United SGD Fund invests “in money market and short term interest bearing instruments and bank deposits with the objective of earning a yield enhancement over Singapore dollar deposits.”
LionGlobal SGD Enhanced Liquidity Fund invests “in a broadly diversified portfolio of high quality debt instruments.” It also states that it invests in debt instruments diversified across varying issuers and tenures while maintaining weighted average portfolio credit rating of A-.
Fees
Endowus Access Fee per year – 0.05%
Fund-Level Fees
The expense ratio is what we incur as a total. Note that Endowus also rebates trailer fees back to us, and states that the fund-level fees after this is 0.27% per annum.
UOB United SGD Fund:
- Expense ratio – 0.33%
LionGlobal SGD Enhanced Liquidity Fund
- Expense ratio – 0.31%
Endowus Cash Smart Ultra
We can invest both our cash and SRS funds into this cash management account.
Returns
The projected returns for individuals investing in Endowus Cash Smart Ultra is 4.6% to 4.9%. This is after taking into consideration that Endowus rebates trailer fees to investors.
Minimum Initial Deposit
While there is no minimum initial deposit for Endowus Cash Smart Ultra, we need to invest $1,000 into the Endowus platform, which also consists of its cash investment and CPF investment.
Underlying Funds
The difference between Endowus Cash Smart Core, Enhanced and Ultra is in the slight possibility of negative returns. Its historical max loss is -5.07%.
Endowus Cash Smart Core Ultra does have higher volatility for a cash management account, but it also gives the one of best returns among other cash management accounts. To achieve the returns while maintaining stability, Endowus Cash Smart Core Ultra comprises 5 funds:
27.5% in LionGlobal SGD Enhanced Liquidity Fund which invests “in a broadly diversified portfolio of high quality debt instruments.” It also states that it invests in debt instruments diversified across varying issuers and tenures while maintaining weighted average portfolio credit rating of A-.
25.0% in LionGlobal Short Duration Fund which invests in an actively managed portfolio of Singapore and international bonds, high-quality interest rate securities, and other related securities.
25.0% in Fullerton Short Term interest Rate Fund which invests in fixed income securities and money market instruments with no specific industry or sectoral emphasis.
12.5% in Nikko Shenton Income Fund which aims to provide regular income distributions while seeking to achieve returns in excess of 4% per annum over the medium to long term.
10.0% in PIMCO Low Duration Income Fund which seeks to achieve attractive income by actively managing and tapping into multiple areas of the global bond market, while maintaining relatively low interest rate exposure with a secondary goal of capital appreciation.
Fees
Endowus Access Fee per year – 0.05%
Fund-Level Fees
The expense ratio is what we incur as a total. Note that Endowus also rebates trailer fees back to us, and states that the fund-level fees after this is 0.29% per annum.
LionGlobal SGD Enhanced Liquidity Fund:
- Expense ratio – 0.31%
Fullerton Short Term interest Rate Fund
- Expense ratio – 0.14%
LionGlobal Short Duration Fund
- Expense ratio – 0.31%
Nikko Shenton Income Fund
- Expense ratio – 0.42%
PIMCO Low Duration Income Fund
- Expense ratio – 0.50%
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FSMOne Auto-Sweep Account
The FSM Auto-Sweep account automatically “sweep” all our excess cash from sales proceeds, bond maturities, dividends and coupons towards earning better returns. This helps us eliminate any period of time when our funds are sitting idle to earn better-than-bank interest rates.
Do note that non-SGD denominated cash as well as funds we deposit into our FSM account but do not give any instructions to “auto-sweep” into investments, will not be automatically invested. In November 2022, FSM announced the CNH Auto-Sweep Account – enabling us to automatically sweep excess Chinese RMB.
When we invest through FSM, we don’t have to do anything for the money to be transferred from this account and into paying for our investments.
Returns
The projected returns on FSM Auto-Sweep Account is 2.832% p.a.
Minimum Initial Deposit
There is a minimum one-time deposit of $50.
Underlying Funds
FMS Auto-Sweep Account invests 60% in the LionGlobal SGD Enhanced Liquidity Fund, 15% United SGD Money Market,10% of its funds in the Fullerton SGD Cash Fund, and keeps the remaining 15% in cash. This is why it delivers a slightly lower return even though it is invested in the same underlying funds as the Endowus Cash Smart Core portfolio.
As stated in its factsheet, the Fullerton SGD Cash Fund “intend to hold its assets primarily in Singapore Dollar deposits with eligible financial institutions with varying terms of maturity of not more than 366 calendar days.” It also states that up to 10% of its net asset value may be placed with eligible financial institutions exceeding 366 days but not more than 732 days.
LionGlobal SGD Enhanced Liquidity Fund invests “in a broadly diversified portfolio of high quality debt instruments.” It also states that it invests in debt instruments diversified across varying issuers and tenures while maintaining weighted average portfolio credit rating of A-.
Fees
A management fee of 0.05% per quarter is charged, amounting to 0.2% per year.
Fund-Level Fees
The expense ratio is what we incur as a total.
Fullerton SGD Cash Fund:
- Expense ratio – 0.15%
LionGlobal SGD Enhanced Liquidity Fund
- Expense ratio – 0.31%
United SGD Money Market Fund
- Expense ratio – 0.33%
MoneyOwl WiseSaver
We can invest both our cash and SRS funds into this cash management account.
Returns
The projected returns when we invest in the MoneyOwl WiseSaver portfolio is 3.80% p.a. This is lower than what we will find listed on its website as the listed figure of 3.95% does not yet take into account fund-level fees adding up to approximately 0.15%.
Minimum Initial Deposit
There is a minimum of $10 for a one-time deposit or a regular savings plan.
Underlying Funds
The underlying fund is the Fullerton SGD Cash Fund.
Fees
There are no sales charge, advisory or platform fees charged by MoneyOwl. The only fees we incur is from the fund level.
Fund-Level Fees
Fullerton SGD Cash Fund:
- Expense ratio – 0.15%
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Phillip Smart Park (SGD)
Similar to FSM Auto-Sweep Account, we cannot park our Supplementary Retirement Funds (SRS) into Phillip Smart Park.
Returns
Phillip Smart Park is projected to pay an interest return of 3.1536% p.a.
Minimum Initial Deposit
We need to maintain a balance of at least $100 in our POEMS account to enjoy investing via the Phillip Smart Park account (SGD).
Underlying Funds
The underlying fund is the Phillip Money Market Fund.
Fees
There are no fees charged for maintaining this account. The only fees we incur is from the fund level.
Fund-Level Fees
Phillip Money Market Fund:
- Expense ratio – 0.37%
Read Also: Money Market Funds: What Are They And How Singapore Investors Can Use Them
Phillip Smart Park (USD)
Similar to FSM Auto-Sweep Account, we cannot park our Supplementary Retirement Funds (SRS) into Phillip Smart Park.
Returns
Phillip Smart Park is projected to pay an interest return of 4.3173% p.a.
Minimum Initial Deposit
We need to maintain a balance of at least $100 in our POEMS account to enjoy investing via the Phillip Smart Park account (USD).
Underlying Funds
The underlying fund is the Phillip US Dollar Money Market Fund.
Fees
There are no fees charged for maintaining this account. The only fees we incur is from the fund level.
Fund level Fees
Phillip Money Market Fund:
- Expense ratio – 0.37%
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StashAway Simple
We can invest both our cash and SRS funds into this cash management account.
Returns
The projected returns for StashAway Simple is 3.3% p.a. As listed on its website, StashAway rebates 0.15% of its trailer fees back to investors to achieve this return. A spokesperson from StashAway tells us that it takes its advertised projected rate very seriously, and may provide an additional StashAway rebate to its investors to achieve it.
Minimum Initial Deposit
There is no minimum deposit or balance required.
Underlying Funds
StashAway Simple allocates 30% of our funds in the LionGlobal SGD Money Market Fund and the other 70% in the LionGlobal SGD Enhanced Liquidity Fund.
The LionGLobal SGD Money Market Fund aims to invest in high quality short-term money market instruments and debt securities to provide a return comparable to that of SGD short-term deposits.
LionGlobal SGD Enhanced Liquidity Fund invests “in a broadly diversified portfolio of high quality debt instruments.” It also states that it invests in debt instruments diversified across varying issuers and tenures while maintaining weighted average portfolio credit rating of A-.
Fees
StashAway does not charge any fees to investors. The only fees we incur are from the fund level.
Fund-Level Fees
LionGlobal SGD Money Market Fund:
- Expense ratio – 0.19%
LionGlobal SGD Enhanced Liquidity Fund
- Expense ratio – 0.31%
Read Also: StashAway Simple Cash Management Account Vs Regular Savings Accounts – What’s the Difference?
StashAway Simple Plus
StashAway Simple Plus was recently launched to deliver higher returns (by shouldering slightly higher risks). We can use our cash and SRS to invest in this cash management account.
Returns
The projected returns for StashAway Simple Plus is 4.6%-5.0% p.a. StashAway also rebates 0.19% of its trailer fees back to investors to achieve this return.
Minimum Initial Deposit
There is no minimum deposit or balance required.
Underlying Funds
StashAway Simple Plus splits our investment into three funds. 20% goes into the LionGlobal SGD Enhanced Liquidity Fund, which invests in a broadly diversified portfolio of high quality debt instruments.
35% goes towards the Nikko AM Shenton Short Term Bond Fund, which has exposure to a diversified portfolio of good quality, short-term bonds and money market instruments. There is no target industry or sector and the Fund is not country-specific.
The remaining 45% is invested in the LionGlobal SGD Short Duration Bond Fund, which invests in an actively managed portfolio of Singapore and international bonds, high-quality interest rate securities, and other related securities.
Fees
StashAway does not charge any fees to investors. The only fees we incur are from the fund level.
Fund-Level Fees
LionGlobal SGD Enhanced Liquidity Fund:
- Expense ratio – 0.31%
NIKKO AM Shenton Short Term Bond Fund
- Expense ratio – 0.40%
LionGlobal SGD Short Duration Bond Fund:
- Expense ratio – 0.31%
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Syfe Cash+
Currently, we can invest our cash only into this cash management account.
Returns
The projected returns for Syfe Cash+ is 3.3% p.a. As listed on its website, Syfe also rebates 0.13% trailer fees back to investors to achieve this return.
Minimum Initial Deposit
There is no minimum deposit or balance required.
Underlying Funds
Syfe Cash+ allocates 30% of our funds in the LionGlobal SGD Money Market Fund and 70% in the LionGlobal SGD Enhanced Liquidity Fund.
The LionGLobal SGD Money Market Fund aims to invest in high quality short-term money market instruments and debt securities to provide a return comparable to that of SGD short-term deposits.
LionGlobal SGD Enhanced Liquidity Fund invests “in a broadly diversified portfolio of high quality debt instruments.” It also states that it invests in debt instruments diversified across varying issuers and tenures while maintaining weighted average portfolio credit rating of A-.
Fees
Syfe does not charge any fees to investors. The only fees we incur are from the fund level.
Fund-Level Fees
LionGlobal SGD Money Market Fund:
- Expense ratio – 0.19%
LionGlobal SGD Enhanced Liquidity Fund
- Expense ratio – 0.31%
Read Also: Syfe Cash+: How Is It Different From Other Cash Management Accounts?
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Tiger Vault
Tiger Vault, by Tigher Brokers, works slightly differently to the other cash management accounts, giving investors more control in the funds we want to invest in. We need to switch on the “auto-sweep” function if we want Tiger Brokers to sweep our cash balances into Tiger Vault. It also offers SGD, USD and soon-to-be-launched HKD cash management accounts.
Returns
Tiger Vault offers up to 4.5% annual return through the funds available on its platform. Do note that we need to select the actual fund(s) that we want to invest in.
Minimum Initial Deposit
We can activate Tiger Vault with an investment of just $1.
Underlying Funds
As mentioned, there is no fixed portfolio for us to invest in. We can choose to invest in:
For SGD investments:
- Fullerton SGD Cash Fund “A” Acc
- LionGlobal SGD Enhanced Liquidity “A” (SGD) Acc
- LionGlobal SGD Enhanced Liquidity “T” (SGD) Acc
- LionGlobal SGD Money Market “A” (SGD) Acc
For USD investments:
- Fullerton USD Cash “A” (USD) Acc
- LionGlobal USD Enhanced Liquidity “A” (USD) Acc
Fees
Tiger Brokers does not charge any fees for Tiger Vault. The only fees we incur are from the fund level.
Fund-Level Fees
As we can see, many of the funds offered by Tiger Vault are also part of other cash management accounts. This way, we can either choose our preferred portfolio mix or stick to a single fund.
Fullerton SGD Cash Fund:
- Expense ratio – 0.15%
LionGlobal SGD Enhanced Liquidity Fund
- Expense ratio – 0.41%
Fullerton USD Cash Fund
- Expense ratio – 0.31%
LionGlobal USD Enhanced Liquidity Fund
- Expense ratio – 0.39%
moomoo Cash Plus
Another broker-led cash management account is moomoo Cash Plus.
Returns
We earn different returns depending on the actual fund that we invest in. By turning on moomoo’s “Smartsave” feature, our uninvested funds will be swept into the cash management fund.
Minimum Initial Deposit
The minimum investment amount is $0.01.
Underlying Funds
There are two main funds we can invest in:
- Fullerton Cash Fund; and
- CSOP USD Money Market Fund
Fees
moomoo does not charge any fees, so the only fees we incur are from the fund level.
Fund-Level Fees
As we can see, many of the funds offered by Tiger Vault are also part of other cash management accounts. This way, we can either choose our preferred portfolio mix or stick to a single fund.
Fullerton SGD Cash Fund:
- Expense ratio – 0.15%
CSOP USD Money Market Fund:
- Expense ratio – N.A.
Read Also: moomoo Cash Plus: How Can We Earn Even Higher Returns While Investing
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What About Fixed Deposits and High-Interest Savings Accounts Or Singapore Savings Bonds (SSB) and Treasury Bills (T-Bills)?
Other very safe investments include fixed deposits, high-interest savings accounts, the Singapore Savings Bonds (SSB), or government treasury bills (T-bills). Given the rising interest rate environment, we can earn a decent return on these risk-free fixed income products today.
Nevertheless, by taking a little more risk via cash management accounts, we can grow our funds by a slightly higher amount. Moreover, most cash management accounts offer us greater flexibility of using our funds. We can withdraw or invest them, rather than lock-up our cash (at least for a period of time) in some of the products mentioned above.
Which Of Our Funds Should We Park In A Cash Management Account?
As mentioned, we should not use put cash meant for our daily expenses into our cash management accounts as we cannot leverage on banking services, such as ATMs, payment facilities on iBanking or debit card.
While we can invest all our funds, it makes most sense to invest only funds that we do not want to put into the financial markets to earn a higher return over the long term, while taking on risks that may see its value substantially rise or fall. This includes:
– Emergency funds, which should amount to 6 to 12 months of our daily expenses
– Money earmarked for an upcoming big-ticket expense, such as wedding, home renovation, or to purchase a car
– Funds that we do not want to invest into the markets right away, but will pour into the markets when we spot opportunities or by dollar-cost averaging
– funds set aside to buy a property, especially after selling off investments or another property
This article was first published on 13 July 2020 and updated with new information. This article also contains affiliate links. DollarsAndSense may receive a share of the revenue from your sign-ups. You can refer to our editorial policy here.
The post Complete Guide To Cash Management Accounts In Singapore [2023 Edition] appeared first on DollarsAndSense.sg.
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