Deep Dive Into Syfe Cash+

With interest rates plunging worldwide, it is getting harder to find safe places to park your cash and achieve a decent return on your savings. This is why Syfe has built our cash management portfolio as a hub for all your money. 

In essence, Syfe Cash+ lets you earn more on your savings with a projected rate of 1.5% per annum on all deposits made.

What’s more, you get to keep all of what you earn since you pay no Syfe management fees for the Cash+ portfolio. 

How we built Cash+

The Cash+ portfolio is constructed using funds from Lion Global Investors, one of the largest asset managers in Southeast Asia, and a member of the Oversea-Chinese Banking Corporation Limited (OCBC) Group.

Here’s what the portfolio holds.

  • LionGlobal SGD Money Market Fund (30% allocation)
  • LionGlobal SGD Enhanced Liquidity Fund (35% allocation)
  • LionGlobal Short Duration Bond Fund (35% allocation)
Source: Syfe, Lion Global Investors as at 26 March 2021

The underlying assets of all three funds are short-term and low-risk financial assets ranging from government and corporate bonds to high quality interest rate securities.

For instance, the LionGlobal SGD Money Market Fund holds debt instruments such as government bonds, high-quality corporate bonds, corporate bills, and deposits with financial institutions. According to the latest data we received from Lion Global Investors, the fund’s weighted duration is 0.49 years (about 5 months) as of 26 March 2021.

As such, the LionGlobal SGD Money Market Fund can be considered very low risk in nature. Generally, funds with assets that hold shorter maturities tend to be less risky because the fund will get its principal back much quicker. 

This also means that the yield to maturity will be relatively lower as compared to a short duration bond fund that holds assets with a longer maturity. From the table above, the LionGlobal Short Duration Bond Fund has a yield to maturity of 1.96% and a weighted duration of 2.06 years (as at 26 March 2021).

When constructing Cash+, we have considered not just the published yields of the underlying funds but also credit and duration risk of the underlying funds. The fund allocation you see has been carefully managed to optimise yield while balancing these risks.

This can also be seen in the maximum drawdown that the Cash+ portfolio would have experienced in 2020, when the bond market experienced higher volatility due to the coronavirus pandemic. The Cash+ portfolio would have seen a decrease of 0.73% – a dip of less than 1%.

Understanding the projected return 

As a cash management product, Syfe Cash+ is designed to provide you the best possible return on your cash with the lowest possible risk of loss. 

Here’s how we’ve calculated our projected return of 1.5% p.a. for Syfe Cash+.

The gross projected return is simply the sum of the amortised yield of the three funds within Cash+. While LionGlobal charges a fund-level fee of 0.35%, Syfe does not charge any management fee on the Cash+ portfolio. Any fund level rebates we receive are passed on to clients. This gives us the net projected return of 1.5% per annum.

Investing in these funds on your own

When you deposit funds in Cash+, we invest them into the institutional share class of the underlying funds, which have lower fund fees and expense ratios. This is why it is much more cost-efficient to grow your savings with Syfe Cash+ than it would be to purchase these funds on your own. 

Moreover, retail investors don’t normally have access to these institutional share classes.

Is Cash+ safe? 

Syfe Cash+ is a diversified investment portfolio of money market and short duration bond funds that are generally considered very low risk. This is because these funds have underlying holdings in safe, low-risk assets such as institutional deposits, government and high-quality corporate bonds. 

It is important to understand that the Cash+ portfolio is not a fixed deposit or a bank savings account. It is also not risk-free, although it is a very low risk investment.

As the risk-return trade off illustrates, additional returns do come with additional risk. The base interest rate for most bank savings accounts is 0.05% p.a. while the projected return for Cash+ is 1.5% p.a. 

It all boils down to what you want to achieve with your spare cash and savings. If you are comfortable with the incremental risk and want a product that can earn you higher returns than most savings accounts, Cash+ may be a worthwhile portfolio for you to consider. 

Comparing Cash+ with other cash management solutions

Singaporeans have a range of options to choose from when deciding where to park their spare cash. But Syfe Cash+ stands out not only for its higher projected return, but the ease with which anyone can get started.

Information accurate as of 6 April 2021

There is no minimum deposit amount nor minimum balance required for Cash+. As with Syfe’s other investment portfolios, there are absolutely no lock-ups too. This means you can make unlimited deposits and withdrawals in the way that works best for you, at no cost. 

Cash+ also provides daily accrual of returns, unlike savings accounts and fixed deposits. Savings accounts pay out interest monthly while fixed deposits typically make interest payments quarterly or annually. 

The benefit of your returns being accrued daily is that you can see your savings grow every day as your returns are automatically reflected in your Cash+ portfolio value. Should you opt to withdraw your funds, you get to keep all returns accumulated during the period you invest in Cash+. Should you opt to continue investing with Cash+, you can let your returns compound to grow your cash more quickly. 

Opening a Cash+ portfolio

Anyone can open a Cash+ portfolio. You don’t need to have an investment portfolio with us to create one. Simply sign up here to get started. If you use MyInfo, completing your sign up takes less than 5 minutes!

If you’re an existing Syfe customer, simply log in to your account and click on “Add Portfolio” to create your Cash+ account. You can transfer funds either from your bank account, or by moving funds from your Syfe portfolio(s) into Cash+.