How to make your MONEY work harder 24/7! August 24, 2022

How to make your MONEY work harder 24/7!

A safe haven for Investors

With the constant bombardment of advertisements on cash parking facilities especially in the current market situation, it may be increasingly confusing and difficult to make a choice. In recent times, some bonds have caused suffering, the stock market has not brought much joy, and inflation is increasingly worrisome. But there is a silver lining – Money Market Fund is finally beginning to pay a considerable amount of returns!


What is Money Market Fund?

Money Market Fund (MMF) is a type of mutual fund that invests in Fixed Deposits and highly liquid, short-term cash equivalent instruments called Money Market Instruments. These instruments include cash, cash equivalent securities and high credit rating debt-based securities with a short-term maturity.


Why Money Market Fund?

Both small-time investors and major institutions can hold money temporarily in these funds as they are a handy investment tool. Since the collapse in March 2020, the MMF yields have consistently been very low (close to zero), earning investors practically close to nothing.

However, consumer MMF yields have started to rise in 2022 and will continue to grow if the Federal Reserve continues to raise the short-term interest rates it directly controls.

But don’t get too excited just yet! This is not a case of returning to the early 1980s, where the Money Market rates soared to above 15 percent, along with the rate of inflation.

Following the “lower-for-longer” yield environment of the previous two years, investors are now faced with new considerations pertaining to yield, price stability and liquidity as global central banks continue the rate hikes this year.

In the current climate of rising interest rates, investors may want to think about using MMF as an alternative to bank deposits. Historically, MMFs have surpassed bank deposit rates although they (bank deposits) have provided a marginally higher yield than MMFs in the run-up to previous rate hike cycles.

This distinction is primarily due to how MMFs and bank deposits are structured. Bank deposits are unsecured obligations that banks have on their balance sheets, whereas MMFs are diversified portfolios of highly liquid assets. Rate increases are reflected in the assets that MMFs hold (subject to the underlying portfolio positioning), but deposit rates are fully controlled by individual banks. This means that the balance sheet and funding requirements of banks place an inherent limit on the yield potential of depositors.

As people need safe places to keep their short-term funds in the current uncertain markets, Money Market Fund may be a better option as compared to a bank deposit, as it restricts one’s fund liquidity.


Phillip Money Market Fund (PMMF):

Phillip Money Market Fund has been in existence since 16 April 2001, with a zero-credit default for the past 21 years. As of 29 July 2022, the fund size was at S$1,106 million, making it the second largest Money Market Fund in Singapore.

It sets itself apart from other Money Market Funds as it was the first in the market to have a T+0 dealing time. Since its inception, the fund has had a stable performance with no lock up and redemption penalty.

How to make your MONEY work harder 24/7!Source: https://www.poems.com.sg/excess-funds-management/


*A Money Market Fund is for a short duration and runs on daily annualised return. PMMF 30-day (monthly) annualised yield is updated on a weekly basis. As it looks at monthly annualised return on a weekly basis it is a more accurate reflection of the current market environment as compared to a 1-year rolling annualised return.

Watch it here.

There are so many choices out in the market. Let’s take a deeper study below.


Phillip Money Market Fund Vs Other Money Market Fund

How to make your MONEY work harder 24/7!Source: PhillipCapital Management Pte Ltd


As seen from above, Phillip Money Market fund was able to maintain an increasing NAV (Net Asset Value) throughout the Global Financial Crisis in 2008. Conservative security selection ensured that none of the portfolio’s fixed income holdings faced default. Unfortunately, there were certain money market funds that ‘broke the buck’ due to their investments in fixed income securities issued by Lehman Brothers.

How to make your MONEY work harder 24/7!

*SDF = Short Term Duration Fund
*MMF1 = Other Money Market Fund Provider
Source: Phillip Capital Management Pte Ltd


How to make your MONEY work harder 24/7!

*SDF = Short Term Duration Fund
*MMF1 = Other Money Market Fund Provider
Source: Phillip Capital Management Pte Ltd


How to make your MONEY work harder 24/7!

*SDF = Short Term Duration Fund
*MMF1 = Other Money Market Fund Provider
Source: Phillip Capital Management Pte Ltd


How to make your MONEY work harder 24/7!

*SDF = Short Term Duration Fund
*MMF1 = Other Money Market Fund Provider
Source: Phillip Capital Management Pte Ltd


From these 4 charts you can see that Phillip Money Market Fund is very stable and is not volatile, compared to the other 2 MMFs.

How to make your MONEY work harder 24/7!Source: Phillip Capital Management


This is further shown in the table above where Phillip Money Market Fund only has 2 days of negative returns in the past 12 years in comparison to Short Duration Bond Fund and Money Market Fund 1.


Keen to learn how you can start growing your cash effortlessly?

At Phillip Securities, we have an Excess Fund Management Facility (SMART Park) that helps you manage your cash.

SMART Park is an excess fund facility that manages your trading account’s idle cash by investing it, on a discretionary basis. The funds are invested into Phillip Money Market Fund for SGD and Phillip US Dollar Money Market Fund A for USD.


How do I subscribe to the Excess Funds Facility Management (SMART Park)?

For those who have no accounts with us

  • If you have yet to open an account, you may open one, and opt into the Excess Funds Management Facility (SMART Park) at the same time.

For existing account holders

  • You can opt-in (using the methods below) and transfer your funds into SMART Park.

1. Opt-In via your POEMS Account here

  • Log in to www.poems.com.sg and head to Account Management > Online Forms > Excess Fund Authorisation to opt-in

2. Opt-In via the Phillip MyWealth App

  • Download Phillip MyWealth App via the Appstore or Playstore
  • Log in to MyWealth App
  • Click on Smart Series > Smart Park > Select the Account Number to Opt-In

    How to make your MONEY work harder 24/7!

  • Once you have opted in, excess funds in your POEMS Account with a minimum balance of SGD100 will be automatically invested into the Phillip Money Market Fund.
  • Fund your account using the Deposit fund option on the POEMS platform, POEMS 2.0/3.0 Mobile App or MyWealth App.

For other funding methods, click here.


What if I need my funds and want to use the funds for investments?

2) The funds will be automatically redeemed from the facility under any of the following scenarios:

  • For shares payment, other investment purchases or transactional fees charged
  • For funds withdrawal request by the account holder

There are no sales charges or administrative fees for depositing or withdrawing your money from SMART Park.

It is that easy and convenient! The beauty of it is that there is no lock in period. While you are waiting for the next investment opportunity, you can grow your idle cash with SMART Park!

Make your money work harder and SMARTER, Start Now!


Disclaimer

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

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IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com