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With global interest rates at an all-time low, it is getting harder to find a good place to park your money if you are looking for somewhere with decent rates and capital protection. Most of our previously recommended investments that provide guaranteed principal and returns are now yielding below 1%. Meanwhile, interest rates for high yield savings account are being cut one after another (i.e. DBS Multiplier in January 2021 and OCBC 360 in February 2021). In fact, we recently wrote about 5 reasons why a high interest savings account no longer make sense in 2021.
Thus, Syfe’s recent launch of Syfe Cash+ caught our attention as a new entrant to the cash management account scene in Singapore.
In this article, we take a deeper look into Syfe Cash+ and examine how different it is from other cash management accounts.
Syfe Cash+ Is A Cash Management Account
On the surface, Syfe Cash+ looks like just another cash management account. Similar to other cash management accounts, Syfe Cash+ enables us to earn a higher interest rate either by taking on slightly higher investment risk and offers us a similar level of liquidity as bank accounts, allowing us to withdraw our funds with no lock-up.
However, unlike bank accounts, we can’t use our cash management accounts to withdraw money from ATMs or make card and cashless payments. Additionally, the fund withdrawals are not immediate and will take about 2 to 4 days to process.
One key difference about cash management accounts is that the funds are not protected under Singapore Deposit Insurance Corporation (SDIC). Whereas bank accounts and insurance savings plans have SDIC protection for funds up to $75,000.
Syfe Cash+ Has The Highest Projected Return Rate Compared To Other Cash Management Accounts
Currently, Syfe Cash+ offers the highest projected annual return rate at 1.75% amongst the cash management accounts. However, this is subject to change (as are the rates for the other cash management accounts) based on the prevailing interest rate environment and underlying fund returns.
|Cash Management Account||Projected Annual Return||Minimum Initial Deposit||Approximate Withdrawal Time||SRS Applicable?||Underlying Funds|
|Syfe Cash+||1.75%||No minimum||3 to 4 business days||No||35% LionGlobal Short Duration Bond Fund
35% LionGlobal SGD Enhanced Liquidity
|Endowus Cash Smart Core||0.8% to 1.0%||$100 ($10,000 for new Endowus user)||3 business days||Yes||50% Fullerton SGD Cash Fund
50% LionGlobal SGD Enhanced Liquidity
|Endowus Cash Smart Enhanced||1.4% to 1.6%||$100 ($10,000 for new Endowus user)||3 business days||Yes||50% UOB United SGD Fund
50% LionGlobal SGD Enhanced Liquidity
|FSMOne Auto-Sweep||0.686%||$50||2 business days||No||55% LionGlobal SGD Enhanced Liquidity
25% Fullerton SGD Cash Fund20% Cash
|MoneyOwl WiseSaver||0.27%||$10||1 to 2 business days||Yes||100% Fullerton SGD Cash Fund|
|Phillip Smart Park (SGD)||0.475%||No minimum||1 to 2 business days||No||100% Phillip Money Market Fund|
|Stashaway Simple||1.4%||No minimum||3 to 4 business days||Yes||50% LionGlobal SGD Enhanced Liquidity
50% LionGlobal SGD Money Market Fund
For the rest of the conditions, Syfe Cash+ compares favourably with other cash management accounts. Syfe Cash+ offers no lock-ups, no minimum balance, no management fee and 100% trailer fee rebates. There are no fees to enter nor exit the account and you can freely transfer between your different Syfe accounts as well as withdraw your funds to your bank account. However, there is no current capability to invest your Supplementary Retirement Scheme (SRS) funds with Syfe Cash+.
Syfe Cash+’s Underlying Funds Have Higher Returns And Potentially Higher Risk
Syfe Cash+’s better projected annual rate is due to the higher projected returns of their underlying funds. Unlike the other cash management accounts, Syfe Cash+ has 3 underlying funds: LionGlobal SGD Money Market Fund (30% allocation), LionGlobal SGD Enhanced Liquidity Fund (35% allocation) and LionGlobal Short Duration Bond Fund (35% allocation).
While the LionGlobal SGD Money Market Fund and LionGlobal SGD Enhanced Liquidity Fund are used by some of the other cash management accounts, only Syfe Cash+ includes the LionGlobal Short Duration Bond Fund.
Based on the LionGlobal Short Duration Bond Fund factsheet, the fund manager may “invest or expose the Fund to sub-investment grade securities”. This discretionary choice to invest in sub-investment grade securities is likely the source of the slightly higher returns of LionGlobal Short Duration Bond Fund, which in turn pulls up the projected returns for Syfe Cash+.
While the LionGlobal Short Duration Bond Fund may seem riskier, it is still a fund that focuses mainly on investment-grade securities and aimed to provide capital growth and income over the medium to long term. Thus, as seen from the above illustration, even in the year of maximum drawdown when the fund was not performing well during the market crash of 2020, the fund’s maximum drawdown was only -2.40%. When placed in the context of Syfe Cash+, with the inclusion of other 2 more stable funds, the maximum drawdown was only -0.73% during a period when the stock market was down more than 30%.
Syfe Cash+ Is An Attractive Option To Park Your Funds
Given the relatively high rate of returns and minimal drawdown in times of volatility, Syfe Cash+ appears to be a highly attractive option if you want a fuss-free alternative to high yield savings accounts.
As the projected returns are not capped, whether you deposit $1,000 or $100,000, you will still receive the 1.75% p.a. return. As this is accrued on a daily basis, you don’t have to limit your withdrawal to a fixed timeframe in order to obtain the returns. While there are potentially other instruments, as the high yield savings accounts (at the higher tiers) and insurance savings plans (within the caps) that yield a higher return, Syfe Cash+ will suit those who are comfortable with the potential drawdowns of cash management accounts and who have larger amounts of funds that they wish to keep liquid.