Syfe / Endowus / Stashaway: Which Cash Management Account Is Best?

In our previous post, we noted that Singtel Dash EasyEarn would be a good place to park your cash and get 1.8% p.a. on your first $20,000. As of February this year, sign-ups for Singtel Dash’s EasyEarn have sadly closed.

In its place is Singtel Dash PET, another insurance savings plan that offers you 1.7% p.a. for your first $10,000 and 1.2% p.a. for amounts above $10,000. However, there’s a minimum deposit of $50 and a maximum of $30,000 that you can stash in your PET account.

If you’re looking for a product that can offer high interest rates on all your deposits, cash management products may be the answer. Whether you have $10,000 or $100,000, the advertised rate you see applies to every cent.

What are cash management products?

Cash management products started gaining traction in 2020 after interest rate cuts left investors seeking higher returns on their money, but with relatively low risk. 

In a nutshell, cash management products are very low-risk investments that put your cash in cash funds, money market funds (MMF) or short-duration bond funds. Because these are investment products, a number of Singapore investment brokerages and robo-advisors started offering them last year. 

Depending on the provider you choose, your return could range from 0.34% p.a. to as high as 1.5% p.a. with no lock-up periods. This return applies to all your deposits – so if you park $40,000 with them, you’ll get to earn whatever advertised rate on every single cent!

One thing to be aware of is that cash management products are investment products and are thus not guaranteed by SDIC. If that’s a deal-breaker, you may consider insurance savings plans instead. 

For The Frugal Fox, ease and flexibility of withdrawals as well as high interest rates are our top considerations. As such, we have narrowed down our consideration for cash management products as such:

  • Syfe Cash+ (1.5% p.a.)
  • Endowus Cash Smart  (0.8% ~ 1.4% p.a.)
  • Stashaway Simple (1.2% p.a.)

Syfe Cash+: What is it?

Syfe Cash+ is the new kid on the block. It was launched in January this year and caught our eye with the projected return of 1.75% p.a. 

Recently, they announced an adjustment in the projected return of 1.75% p.a. to 1.5% p.a. in light of the persistently low interest rate environment. According to a client note, “while longer term interest rates have increased, short-term rates have continued to remain low and, in some cases, have reduced further in recent months.” This is the main reason Syfe has had to reduce the projected return.

Source: Syfe. Updated chart as of 7 April 2021

Despite the revision in rates, nothing else has changed about the Cash+ portfolio. The underlying funds are all from Lion Global Investors, 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)

The funds’ underlying assets are short-term and low-risk financial assets ranging from government and corporate bonds to high quality interest rate securities. Don’t be alarmed by the average credit rating of ‘BBB’ for the LionGlobal Short Duration Bond Fund. BBB is considered investment grade and represents a relatively low-risk bond or investment.

Another important takeaway from the table above is the overall weighted duration of 1.15 years for Syfe Cash+.

Funds with shorter weighted duration (i.e. their underlying assets have shorter maturities) generally tend to be less risky because the fund will get its principal back much quicker. Put simply, there is less time for things to go catastrophically wrong.

How has Syfe Cash+ performed since launch?

The Cash+ portfolio has actually delivered annualised net returns higher than what they initially projected. From 7 January (their launch) to 31 March 2021, the annualised return was 2.18%. The projected return advertised was 1.75% p.a.

Source: Syfe

Of course, past returns are no indication of future returns. But the return performance does provide a sense of whether Syfe can realistically deliver on their projected returns and how good their projections are.

From what we see, the 1.75% rate would not have been sustainable, given that returns of the three LionGlobal funds have mostly been sliding. The Frugal Fox thinks it’s prudent that Syfe has proactively sought to manage expectations, and given investors a chance to reconsider if the Cash+ platform is still right for them.

Endowus Cash Smart: What is it?

The cool thing about Endowus is that there are three different cash management portfolios you can pick based on your risk appetite and how soon you need to access your funds.

Looking at the underlying funds, Endowus Cash Smart Core is the least risky and also the one with the lowest return p.a. (0.8% to 0.9%). 

  • Fullerton SGD Cash Fund – Class A (50% allocation)
  • Lion Global SGD Enhanced Liquidity Fund (50% allocation)

Endowus Cash Smart Enhanced has slightly higher risk and in turn, you’re compensated with a slightly higher return of 1.2% to 1.4%.

  • Lion Global SGD Enhanced Liquidity Fund (50% allocation)
  • UOBAM United SGD Fund (50% allocation)

The newest addition is Endowus Cash Management Ultra. It carries higher risk than the other two funds but offers higher returns of 1.7% to 1.9%.

  • Fullerton Short Term Interest Rate Fund (70%)
  • Lion Global SGD Enhanced Liquidity Fund (30%)

(Do note that Endowus too has had to reduce the projected return of their Cash Smart solutions. Core was launched with a projected return of 1% – 1.1% and Enhanced had a projected return of 1.6% to 1.8% initially.)

The difference in risk levels and returns is due to the bond maturity which you can see in the table below. Cash funds typically have the shortest maturity followed by money market funds which tend to have maturities of around 12 months or less. Short-term duration bond funds generally have maturities of around 24 months. 

Source: Endowus

Higher duration risk for higher returns

In this low interest rate environment, you’ll have to take on higher duration risk to get higher returns. The Fullerton Short Term Interest Rate Fund has an average duration of 1.9 years and makes up 70% of Cash Management Ultra. For this reason, it is able to offer higher projected returns of 1.7% to 1.9%.

In fact, the actual annualised return has been a whopping 3.87%. Take note that the time period is a very short timeframe from 6 January to 28 February though. It would be interesting to see how the portfolio performed in March with all that drama around US 10-year Treasury rates.

Source: Endowus

According to Endowus’ website, their Ultra portfolio has a total weighted duration of 1.61 years. This is slightly longer than the weighted duration of 1.15 years for Syfe Cash+, which may indicate that it’s relatively riskier and may be more prone to the recent increases in long-term rates.

Stashaway Simple: What is it?

Like Syfe Cash+ and Endowus Cash Smart, StashAway Simple is a non-guaranteed high-interest yielding cash management portfolio. 

The forecasted 1.2% return is non-guaranteed and is simply a projected return. Since its launch, Stashaway has cut their projected return from 1.9% to 1.4% to 1.2% as of 1 March, on expectations of “ultra low” interest rates.

Here’s the allocation:

  • LionGlobal SGD Money Market Fund (50% allocation)
  • LionGlobal SGD Enhanced Liquidity Fund (50% allocation)

If your risk appetite is more conservative, you’ll be glad to know that StashAway Simple holds no short-term duration bonds.

Apart from this, you’ll notice that their allocation is very similar to Syfe Cash+. The only difference is that Syfe Cash+ contains a short-duration bond fund. While this does mean that Cash+ is slightly riskier compared to Stashaway Simple, we are of the view that the extra return is worth the risk.

One thing we do appreciate is that Stashaway is the only provider to benchmark their cash management product to a risk index. This makes it easy to compare Stashaway Simple with Stashaway’s low-risk investment portfolios. 

According to Stashaway, the StashAway Risk Index for StashAway Simple is 1.7%. That means you have a 99% chance of not losing more than 1.7% of your funds. 

Underlying allocations for Syfe, Endowus and Stashaway cash management accounts

Before we evaluate the ease of deposits and withdrawals with Syfe, Endowus and Stashaway, here’s a summary of their underlying fund allocations. 

Deposits and withdrawals 

All three providers – Syfe, Endowus, Stashaway – are similar in their deposit and withdrawal requirements. Endowus however seems to take quite a long time to process withdrawals.

  • There is no limit on the sum that can earn the projected rate
  • There is no withdrawal fee
  • There is no lock-up period 
Source: Syfe

Syfe Cash+ and Stashaway Simple have the added benefit of having no deposit requirements. You can put in any amount you prefer. For Endowus Cash Smart however, take note that the minimum starting deposit is $10,000.

In terms of fees charged, Syfe Cash+ and Stashaway Simple have no management fees but Endowus Cash Smart does charge a flat fee of 0.05%. 

Lastly, The Frugal Fox likes that you can use your SRS funds to invest in Endowus Cash Smart and StashAway Simple! 

Why we think Syfe Cash+ stands out 

The main considerations for The Frugal Fox are fast and easy withdrawals (you never know when you may need the cash urgently) and high interest rates.

Syfe Cash+ checks these boxes. It’s withdrawal lead time of 2 – 3 business days is pretty fast compared to the other platforms. And compared to Endowus Cash Smart, we also don’t see why we’ll have to pay a 0.05% fee when we can get a better return with Syfe Cash+ for free.

That said, we’re pretty comfortable with risk and do not foresee needing the money in the next 1 – 2 years. If we were to need the money in the next few months, we might go with Stashaway Simple for the lower risk instead.

Conclusion

Low interest rates are the new normal. In January and February, we saw banks like DBS, OCBC and Standard Chartered cut interest rates yet again on their savings account. Right now, The Frugal Fox gets barely 1% p.a. in interest even after salary credits and other category spends. 

If we’re looking for a place to park just $10,000, Singtel Dash PET is the best choice for the guaranteed 1.7% return.  

But to hedge the uncertainty of what will happen in subsequent years, we think parking any savings beyond $10,000 in Syfe Cash+ is still a smart choice. Syfe has now rolled out an automatic transfer feature from Cash+ to other Syfe investment portfolios. For us, Cash+ is a place to hold cash and get better returns than our bank account before we deploy that money into investments.

With interest rates so low, the only real way to get rich is to start investing! No point quibbling over the minute 0.1% to 0.2% difference in rates being offered by the various cash management providers.

If you’re interested to start investing in Syfe, get 6 months of free investing when you use our referral code SRP732ACX

You will get SGD $30,000 managed FREE for 6 months. This works out to $75 saved in fees if you invest $30,000, so don’t forget to use it if you’re signing up.

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