Syfe Cash+: How's It Not the same as Other Cash Management Accounts?

With global rates of interest at an all-time low, it is getting harder to locate 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 top yield savings account are now being cut one to another (i.e. DBS Multiplier in January 2021 and OCBC 360 in February 2021). Actually, we recently wrote about 5 reasons why a higher interest checking account no more 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 short article, we take a deeper consider Syfe Cash+ and examine how different it's from other cash management accounts.

Syfe Cash+ Is A Cash Management Account

On the top, Syfe Cash+ looks like yet another cash management account. Similar to other cash management accounts, Syfe Cash+ enables us to earn a greater interest rate either if you take on slightly higher investment risk and offers us a similar degree 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 aren't immediate and can take about 2 to 4 days to process.

One key difference about cash management accounts would be that the money is not protected under Singapore Deposit Insurance Corporation (SDIC). Whereas bank accounts and insurance savings plans have SDIC protection for funds as much as $75,000.

Syfe Cash+ Has The Highest Projected Return Rate Compared To Other Cash Management Accounts

Currently, Syfe Cash+ offers an annual return rate of 1.5% amongst the cash management accounts. However, this is susceptible to change (as are the rates for that other cash management accounts) based on the prevailing interest rate environment and underlying fund returns.

For the rest of the conditions, Syfe Cash+ compares favourably along with other cash management accounts. Syfe Cash+ offers no lock-ups, no minimum balance, no management fee and 100% trailer fee rebates. There aren't any fees to go in nor exit the account and you can freely transfer involving the different Syfe accounts as well as withdraw your funds for your bank account. However, there isn't any current capacity 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 a few 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 purchase sub-investment grade securities is probably the origin of the slightly higher returns of LionGlobal Short Duration Bond Fund, which pulls up the projected returns for Syfe Cash+.

While the LionGlobal Short Duration Bond Fund might 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 just in the year of maximum drawdown once the fund wasn't performing well throughout the market crash of 2020, the fund’s maximum drawdown was just -2.60%. When placed in the context of Syfe Cash+, using the inclusion of other 2 more stable funds, the utmost drawdown was only -0.73% during a period once the stock market was down a lot more than 30%.

Syfe Cash+’s Q1 Performance Update

Now that couple of months have passed because the launch of Syfe Cash+, we are able to see that the performance of Syfe Cash+ continues to be much better than expected with an annualised return of two.18% since launch.

However, to account for the continuing low-interest rate environment, Syfe is revising its projected returns to 1.5% p.a. for the coming quarter. Although this is a conservative projected return, still it compares favourably with other checking account, fixed deposits and cash management solutions.

Syfe Cash+ Is definitely an Attractive Option To Park Your Funds

Given the relatively high rate of returns and minimal drawdown when in volatility, Syfe Cash+ appears to be a very attractive option if you prefer 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 get the 1.5% p.a. return. Because this is accrued on a daily basis, you don’t have to limit your withdrawal to a fixed timeframe to be able to have the returns. While you will find potentially other instruments, because the high yield savings accounts (in the higher tiers) and insurance savings plans (inside the caps) that yield a greater return, Syfe Cash+ will suit those who are confident with the possibility drawdowns of money management accounts and who have larger amounts of funds they wish to keep liquid.

Additionally, should you already committed to other Syfe products his or her Equity100 or REIT+, it is a no-brainer to start using Cash+ for the money that you're saving for future use.

If you are interested to get started on investing with Syfe, DollarsAndSense has an exclusive partnership with Syfe – enjoy 0% management fee for the first $30,000 throughout the first 6 months after you sign up. Apply here to savor the promotion.