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Guide to Choosing the Best Cash Management Account in Singapore

24 Apr 2023

Are you looking for a cash management account in Singapore that offers high interest rates and flexible features? Our comprehensive guide will help you navigate the options and find the best cash management account for your needs.

What are cash management accounts?

Cash management accounts are gaining popularity as their low risk, highly liquid alternatives to cash in the bank.

By putting your money in a cash management account, you will be investing in a cash management fund. These professionally managed funds will put your cash in low-risk instruments such as bank deposits or short-term debt to earn higher interest rates. 

Cash management accounts are hence good candidates for parking your money that do not require immediate access, while earning income from them.

Unlike other types of funds that aim to grow your wealth by taking on some level of market risk, cash management funds are designed to protect your wealth instead. 

There are various ways to access cash management accounts in Singapore, from brokerages to robo-advisors and FinTech solutions. 

In this article, we help provide some clarity on how to decide between them.

What are the benefits of cash management accounts?

Cash management accounts offer a relatively low-risk option for us to earn a potentially higher return on our cash.

In recent months, we have seen some cash management accounts offering a return of close to 3.8% p.a. for Singapore dollar funds and 4.5% p.a. for US dollar funds. 

If you are worried about having too much exposure to a single bank or platform, cash management accounts allow you to spread out your exposure with a small investment amount required. 

What are the risks of cash management accounts?

While cash management accounts have relatively low risk, they are not capital guaranteed. What this means is that there is still a chance that there could be a negative return in a single day in some extreme cases. 

Unlike deposits in savings accounts, funds in cash management accounts are also not insured under Singapore Deposit Insurance Corporation Limited (SDIC).

What to consider when choosing a cash management account?

There are many platform offering cash management accounts that promise higher returns on cash. To guide you through how to choose the best cash management account, we would consider the following factors:

  • Underlying funds and risk profile 
  • Expenses — Fund level fees and platform fees
  • Time required for withdrawals
  • Automatic sweep features
  • Supported sources of funds — Cash, SRS, CPF

#1 - Underlying funds and risk profile

As we shared earlier, cash management accounts aim to earn a higher interest rate by investing in a cash management fund. 

Hence, the most important factor to consider is the underlying cash management fund that your cash management account would invest into. 

We summarise the funds that these cash management accounts offer exposure to in the table below. 

Cash Management AccountEndowusStashAwaySyfeMoomooWebullTiger BrokersMoneyOwlPhillip 
Fullerton SGD Cash FundYes - Secure, Enhanced  Yes - Cash PlusYes - MoneybullYes - Tiger VaultYes - WiseSaver 
Lion Global SGD Enhanced Liquidity FundYes - Secure, EnhancedYes - Simple, Simple PlusYes - Cash+  Yes  
Lion Global SGD Money Market FundYes - DIYYes - SimpleYes - Cash+  Yes  
LionGlobal Short Duration Bond Fund Yes - Simple Plus      
UOB AM SGD Money Market FundYes - Enhanced       
Nikko AM Shenton Short Term Bond Fund Yes - Simple Plus      
Phillip Money Market Fund       Yes - Phillip SMART Park

Cash management accounts that invest in Singapore-dollar denominated cash management funds usually offer exposure to a few of the popular options in the table below. 

You can see that the Fullerton Cash Fund is the most popular option with a fund size of over $2.3B. It screens for eligible and high quality financial institutions to reduce counterparty default risk, and offers investors a reliable cash management solution that’s liquid, conservative while offering a competitive yield.

For those who want to take slightly more risk to boost their returns, the Lion Global SGD Enhanced Liquidity Fund and UOB AM SGD Money Market Fund mixes T-bills with high quality short-term corporate bonds that pay a higher yield while having relatively low default rates.

All funds above are professionally managed by fund managers, and they have minimal (but not 0!) risks from their investments.

Cash Management FundDescriptionInvests in mainly….Fund Size / SGDFund level fees
Fullerton SGD Cash FundThe Fund aims to provide investors with liquidity and a return that is comparable to that of the Singapore Dollar Banks Saving Deposits rate.Bank deposits, T-bills$2.3B0.15%
Lion Global SGD Enhanced Liquidity FundThe Fund 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 weighted average duration of the fund is 12 months.T-Bills, short-duration corporate bonds$553M0.25%-0.35% (depending on class)
Lion Global SGD Money Market FundThe Fund aims to manage liquidity and risk while looking to provide a return which is comparable to that of SGD short-term deposits. The Fund will invest in high quality short-term money market instruments and debt securities, including government and corporate bonds.Short-term corporate bonds$469M0.30%
LionGlobal Short Duration Bond FundThe fund aims to provide total return of capital growth and income over a medium to long term, through investments in Singapore and international bonds, and other high quality interest rate securities.Investment grade bonds, high quality interest rate securities$836M0.56%
UOB AM SGD Money Market FundThe Fund seeks to provide a return which is comparable to that of Singapore dollar short-term deposits by investing primarily in both SGD and non-SGD denominated high-quality debt securities and money market instruments worldwide.Cash, T-Bills$459M0.41%
Nikko AM Shenton Short Term Bond FundThe fund seeks preservation of capital, liquidity and consistent with these objectives, to outperform the SIBOR by investing in a diversified portfolio of good quality, short-term bonds and money market instruments.Short term corporate bonds$373M0.4%
Phillip Money Market FundThe fund seeks to preserve principal value and maintain a high degree of liquidity while producing returns comparable to that of Singapore dollar savings deposits.Cash, fixed deposits, money market securities$988M0.31%
Source: Company websites as of April 2023

 

#2 - Expenses — Fund level fees and platform fees

It may be worth noting how much in fees you’re generally paying to fund managers and platforms to manage your cash, as these expenses could lower the return you are getting from the cash management account. 

The good news is that the fees on most popular funds offered in the cash management accounts have low fees. 

For example, the expense ratio on the most popular Fullerton Cash Fund is merely 0.15% annually, with no platform fees charged by most.

We note that some robo-advisors charge a small platform fee. For example, Endowus charges 0.05% for cash management funds while StashAway currently waives platform fees until July 2023. 

#3 - Time required for withdrawals

Since cash management funds are meant to be liquid, it is important to consider how long it takes for you to redeem the funds and withdraw your cash from the platform. 

Most cash management solutions can receive your deposits and process the instruction within 1-3 business days. However, where most solutions may differ is in the speed of withdrawals.

Most brokerage platforms offer T+1 withdrawal, i.e. your funds will reach your bank account 1 business day after you submit your withdrawal request. 

Some brokerages even offer same day withdrawals (T+0) if you submit your request before 12PM!

Robo-advisors take a longer time for your funds to be redeemed and withdrawn to bank accounts, ranging from 3-4 business days. 

In some cases like Endowus, it may take up to 6 business days to 1 week to fully process due to lengthy settlement and reconciliation processes.

#4 - Automatic sweep features

While cash management accounts are straightforward in nature, some brokerage platforms offer tools for investors to make better use of their cash management accounts.

For example, moomoo Cash Plus, Tiger Vault and Webull Moneybull allow you to sweep uninvested cash into cash management account everyday.

This not only helps you earn extra yield on your idle cash, but they also allow you to maintain your buying power to trade stocks and buy funds. When you subsequently decide to buy a stock, funds from your cash management account can be automatically used to settle your trades.

#5 - Supported sources of funds — Cash, SRS, CPF

Most brokerage platforms only accept cash as the source of funds for cash management accounts.

However, robo-advisors like StashAway, Endowus and MoneyOwl accept both cash & SRS which make them useful for managing your idle SRS funds. 

So far, we haven’t found any offering that accepts CPF as source of funds.

In terms of cash deposit options, FAST transfers and PayNow via UEN in are the most common way of transferring money in. 

Moomoo and Webull offer DDA from your bank account which makes it easy for you to transfer funds and put them to work.

What would Beansprout do?

Cash management accounts are a great tool to grow your savings in a low-risk manner.

When putting your cash to work with cash management accounts, it’s important to consider the following factors:

  • Underlying funds and risk profile 
  • Expenses — Fund level fees and platform fees
  • Automatic sweep features
  • Time required for withdrawals
  • Supported sources of funds — Cash, SRS, CPF

If you would like to take a more conservative approach, then you may prefer a cash management account that allows you to invest in a fund like the Fullerton Cash Fund, which puts your money mainly in bank deposits. moomoo Cash Plus, Tiger Vault, Webull Moneybull, Endowus and MoneyOwl offer access to the Fullerton Cash Fund. 

The Fullerton Cash Fund also has the lowest expense ratio amongst the various funds offered in cash management accounts. The brokerages that offer Fullerton Cash Fund - moomoo Cash Plus, Tiger Vault and Webull Moneybull currently do not charge any platform fee on top of the fund-level fees. 

In addition, cash management accounts offered by the brokerages, such as moomoo Cash Plus, Tiger Vault, Webull Moneybull and Phillip SMART Park, typically have a shorter withdrawal period compared to cash management accounts offered by the robo-advisors. They also offer automatic sweep features that allow your uninvested cash to be put into your cash management account. 

However, if you are looking for a cash management account that allows you to invest your CPF SRS funds, then the potential options would be Phillip Smart PARK, StashAway, Endowus and MoneyOwl.

Check out our Cash Optimiser Tool to calculate how much interest rate you would earn on cash management accounts.

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