3 Yield Enhancing Strategies to temporarily park your monies

Given the current market climate, Investors alike are seeking temporary parking opportunities for their monies. The traditional way of “waiting-out” for a volatile market, will be to park your monies in Fixed Deposits with the banks. However, does that make sense?

We have a few reasons why you should consider Fixed Deposit Alternatives as an interim opportunity. [Miser] 

Why Fixed Deposit Alternatives?

  1. Enhances yield of idle cash or that of bank’s saving account
  2. No lock in with daily redemptions while fixed deposits have minimums holding periods
  3. Low minimum of only $100 investment to get started
  4. Low duration money market funds are less sensitive to interest rate risks
  5. Low risk underlying in quality debt instruments and seek capital preservation

Let’s also take a look at some other external factors.

Singapore bank interest rates remain low

As of writing, Singapore local banks current offer a base interest rate of on average only 0.05%, not to mention fall below fees that are chargeable below bank determined monthly balance minimum and early closure fees on accounts depending on the bank’s terms. Fixed deposit offered in Singapore local banks provide a higher level of 0.55%-1.15%, however this also comes at a 12-month lock in period which comes at a cost of liquidity.

Investment on the right money-market funds provides near comparable returns against local fixed deposit while providing almost the needed liquidity to take opportunity of the market.

Seeking resilience in an underperforming market

Major US indices have suffered from correction and heightened volatility YTD with the Nasdaq falling by -22% and S&P 500 -13% as of 09 May 22, amid global central bank hawkish monetary policies, rising inflation, and geopolitical tensions.

US Market Indices Performance YTD (%). Source: Bloomberg

Increasing allocation to low volatility

An increased tactical asset allocation to money-market instruments listed on Tiger Broker’s Fund Mall can provide low volatility and low correlation to the market can help to build resilience in one’s portfolio. Volatility has risen in 2022 a balanced allocation to equities and money market instruments may provide better diversification and risk to reward by lower volatility from a holistic portfolio perspective.

Volatility Index (VIX). Source: Bloomberg

Focus on short duration income

US 10 year hit a 3.12% high in May this year, given the globally high inflation rates as a result from supply chain disruption and geopolitical issue between Russia and Ukraine. Bonds which are inversely correlated to interest rates have corrected, especially longer duration assets which are more sensitive in a high interest rate environment. High yield bonds have also corrected sharply due to the widening credit spreads, due to global economic uncertainties associated with stagflation concerns. Under this scenario, we favour short duration income products that are less sensitive to interest rate movements.

US 10 Year Yield. Source: Bloomberg

SGD Currency outlook positive

The Monetary Association of Singapore (MAS) continue to be on a tightening stance this year given the inflation backdrop. MAS recentred the mid-point of the exchange rate policy band also known as Nominal Effective Exchange Rate (S$NEER), and increased marginally the rate of appreciation of the policy band. This is the first in 12 years where MAS have use two tools to strengthen the SGD against rising inflation. Singapore utilizes exchange rate policies to promote price stability which provides a backdrop for sustainable economic growth. Monetary policy tailwinds are expected for SGD denominated products.

Nominal Effective Exchange Rate. Source: Bloomberg

Not sure where to look? Here are 3 Conviction Picks on Fund Mall:

1. $LionGlobal SGD Money Market A SGD(SG9999002760.SGD)$ 

  • LionGlobal SGD Money Market provides a return which is comparable to that of SGD short-term deposits.
  • The fund invests in high quality short-term money market Instruments and debt securities.
  • Some of the investments may include government and corporate bonds, commercial bills and deposits with financial institutions.
  • The one-year return for the LionGlobal SGD Money Market was to the tune of 0.6%.

2. $Fullerton SGD Cash Fund A SGD(SG9999005961.SGD)$ 

  • Fullerton SGD Cash Fundprovides investors with liquidity and a return that is comparable to that of the Singapore Dollar Banks Saving Deposits rate.
  • The Fund is benchmarked against the Singapore Dollar Savings Deposits Rate.
  • The one-year return for the Fullerton SGD Cash Fundwas to the tune of 0.3%.

3. $LionGlobal New Wealth Series - LionGlobal SGD Enhanced Liquidity A Acc SGD(SG9999019293.SGD)$

  • LionGlobal SGD Enhanced Liquidity aims to preserve capital, enhance income and provide a high level of liquidity by investing in a broadly diversified portfolio of high-quality debt instruments.
  • The Fund’s approach to enhancing income while providing liquidity is to invest in a high-quality portfolio of debt instruments diversified across varying issuers and tenures
  • While maintaining a weighted average portfolio credit rating of A- and a weighted average duration of around 12 months.
  • The one-year return that the LionGlobal SGD Enhanced Liquidity was to the tune of 1.0%.

Access and invest in over 1000 funds distributed by Tiger Brokers(SG). Go to the Discover section on the app and slide the top bar to Fund Mall in Tiger Brokers(SG)to explore the full suites of funds we have!


Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • auntytiger
    ·2022-05-26
    TOP
    Anywhere which offers above the average local bank base interest of 0.05% is worth considering. Diversify your investment portfolio. Don't put all your🥚in the same 🧺, liquidity got its advantages
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  • Tiger1503
    ·2022-05-25
    buy Spore Saving Bond if there is extra cash earn 1.43 to 2.53% 
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    • jethro
      thanks for sharing
      2023-03-31
      Reply
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  • deben
    ·2022-05-26

    Strategies to temporarily park your money 

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  • WinnieTee
    ·2022-06-26
    Thank you for sharing.
    Reply
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  • JSQ
    ·2022-05-25
    Lol never put money in the bank
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  • NevermindQ
    ·2022-05-25
    Thanks for the insights
    Reply
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  • qhljoey
    ·2022-08-03
    Thank you for sharing
    Reply
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  • jethro
    ·2023-03-31
    thanks for sharing
    Reply
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  • Weelee
    ·2022-11-08
    Ok
    Reply
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  • Antlow
    ·2022-10-09
    Good
    Reply
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  • Cool65
    ·2022-10-04
    Tq for sharing
    Reply
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  • LizzAnn
    ·2022-09-03
    ok
    Reply
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  • Alextan0411
    ·2022-09-01
    👍
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  • Urbans
    ·2022-08-24
    👍
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  • GyroNZ
    ·2022-07-14
    😎
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  • CH1122
    ·2022-06-28
    👍🏻
    Reply
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  • Wonder maker
    ·2022-06-22
    tq
    Reply
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  • Paul Giam
    ·2022-06-10
    谢谢分享
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  • Jjsh
    ·2022-05-26
    Ok
    Reply
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  • falysong
    ·2022-05-26
    up
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