The FSMOne USD Auto-Sweep Account allows you to earn a potentially higher yield compared to most USD savings accounts, while offering the flexibility to buy into investment products available on FSMOne with no lag time.
This post was created in partnership with FSMOne. All views and opinions expressed in this article are Beansprout's objective and professional opinions. FSMOne is the B2C business division of iFAST Financial Pte Ltd ("iFAST"), the Singapore subsidiary of SGX Mainboard-listed iFAST Corporation Ltd.
Many Singaporean investors have noticed that interest rates in the U.S. have been rising recently.
This is in sharp contrast to the fall in fixed deposit rates we have seen in Singapore.
Naturally, many started to ask us if there is a way to get exposure to the higher interest rates in the U.S.
More recently, iFAST has just launched the FSMOne USD Auto-Sweep Account, allowing you to earn a higher yield on your US dollar with as little as US$50.
What is FSMOne USD Auto-Sweep Account?
The FSMOne USD Auto-Sweep Account is a cash management account that allows you to earn a potentially higher yield compared to most USD savings accounts, while offering you the ability to buy into investment products available on FSMOne with no lag time.
If you are already familiar with their FSMOne SGD Auto-Sweep Account and CNH Auto-Sweep Account, then the USD Auto-Sweep account works in the same way, except that it allows you to use your idle US dollar to do so.
Watch the video below to find out more about the FSMOne USD Auto-Sweep Account.
What we like about the FSMOne USD Auto-Sweep Account
#1 – Earn potentially higher yields
The FSMOne USD Auto-Sweep Account’s latest net yield as of 12 July 2023 is 4.50% p.a.
This is higher than the yield on the SGD Auto-Sweep Account of 3.164% and CNH Auto-Sweep Account of 1.741% as of 12 July 2023.
This will allow your idle US dollar to generate a potentially higher yield compared to savings accounts while you are waiting for the next investment opportunity.
For example, the highest interest rate for deposits of US$50,000 into a USD savings account we found was at 2.50% p.a.
The interest rate on USD deposits into local banks’ savings accounts is even lower at just up to 0.03% p.a.
Interest rate on USD savings account (p.a.)
|Bank of China|
|Source: Various bank websites as of 20 July 2023. *Includes sign-up bonus of 2% for 1st six months|
#2 – No lag time when you purchase investment products
Unlike fixed deposits, there is no lock-up period for the FSMOne USD Auto-Sweep Account.
What this means is that you can use the funds to buy investment products available on FSMOne with no time lag.
If an investment opportunity comes up for a U.S. stock, ETF or unit trust, you do not need to wait for your Auto-Sweep holdings to be fully sold before you can use the proceeds to fund the investment.
Compared to fixed deposits, this allows you to have greater flexibility to tap into market opportunities while at the meantime earn a high yield on your idle cash.
#3 – Short redemption period
If you require the funds for other purposes, you can redeem and withdraw them from the FSMOne USD Auto-Sweep Account in a short period of time.
In fact, if you submit your withdrawal instruction before the daily cut-off time of 10 am, you would be able to receive the funds in your USD bank account within the same day, subject to processing time by your bank.
#4 – Automatically invest your extra cash
As the name FSMOne USD Auto-Sweep Account suggests, once you choose to opt-in, the process of investing your extra cash will be automatic.
This means that any dividends, coupons, and redemption proceeds received in your FSMOne account will be swept into your FSMOne USD Auto-Sweep Account to allow you to earn a higher yield.
How does the FSMOne USD Auto-Sweep Account work?
You’d probably be wondering – how does the FSMOne USD Auto-Sweep Account generate a higher yield for investors?
Based on the portfolio allocation as of 12 July 2023, the FSMOne USD Auto-Sweet Account has 90% of its portfolio allocated to the iFAST USD Enhanced Liquidity A USD fund, and 10% of its portfolio held in cash.
The iFAST USD Enhanced Liquidity fund invests in high quality debt instruments including bonds, notes, bills, deposits, and other debt securities. It can also invest in money market funds.
These investment instruments allow the iFAST USD Enhanced Liquidity to generate higher yield over saving accounts.
Is the FSMOne USD Auto-Sweep Account safe?
The iFAST USD Enhanced Liquidity fund targets to maintain a weighted average portfolio credit rating of A-, which is considered an ‘investment grade’ rating by credit agencies.
That said, all investment carries risks, and there are risks relating to the iFAST USD Enhanced Liquidity fund to look out for too.
For example, if you are converting from SGD to USD, you should be aware of the foreign currency exchange risks. This is because the US dollar could weaken against the Singapore dollar.
The US dollar has weakened by more than 5% against the Singapore dollar in the past year, as shown in the chart below.
In the event that the US dollar continues to weaken further against the Singapore dollar, our funds in the FSMOne USD Auto-Sweep Account could be worth lesser when valued in Singapore dollars.
However, this will be less of a concern if your objective is to maintain your funds in US dollars for future needs such as USD investment purposes.
Also, as with all cash management accounts, your funds will not be covered under the Singapore deposit insurance scheme.
Are there any fees for the FSMOne USD Auto-Sweep Account?
There is a management fee for the FSMOne USD Auto-Sweep account of 0.05% per quarter. This would translate to a management fee of US$5 per quarter for US$10,000 of funds in the account.
As with cash management accounts, there are also fund-level fees relating to the management and administration of the fund. As a new fund, the iFAST USD Enhanced Liquidity A USD fund has a management fee of 0.30% per annum.
The latest net yield of 4.50% p.a. as of 12 July 2023 would have taken into account these fund-related expenses and FSMOne management fees.
Step-by-step guide to accessing the FSMOne USD Auto-Sweep Account
Here’s how you can access the FSMOne USD Auto-Sweep Account in 3 simple steps.
#1 - Open an FSMOne Account
If you do not have an FSMOne Account, you can sign up here.
#2 - Enrol in USD Auto-Sweep
For existing FSMOne users or if you have newly signed up, simply login to your account.
Go to your Account Settings > Auto-Sweep Account to opt-in. Settings will apply immediately.
By opting into the Auto-Sweep Account, all your future dividends, coupons, bond maturities, and sale proceeds will be automatically swept to Auto-Sweep Account and re-invested on your behalf.
#3 - Deposit money from your bank account to Auto-Sweep Account
Login to your banking’s website or app and make a fund transfer from your bank account to FSMOne.
Go to Cash Solutions > Transfer Between Account and make a transfer from your FSMOne Cash Account to Auto-Sweep Account.
Once done, your Auto-Sweep Account will start to generate a higher yield for you!
What would Beansprout do?
If you have some idle US dollar savings in your bank account, you can make your US dollar work harder by considering the FSMOne USD Auto-Sweep Account.
The FSMOne USD Auto-Sweep Account’s latest net yield of 4.50% p.a. is above the interest rate of up to 2.5% on USD savings accounts offered by the banks.
Compared to leaving it in a fixed deposit account, the FSMOne USD Auto-Sweep Account offers more flexibility as you can deploy your funds to other investment products on FSMOne instantaneously.
However, do note that the net yield on the FSMOne USD Auto-Sweep Account is dependent on the performance of the iFAST USD Enhanced Liquidity fund, which is subject to fluctuation and not a guaranteed rate.
Overall, we find the FSMOne USD Auto-Sweep Account worth considering especially if you are looking to dollar-cost-average into the US market through a regular savings plan, as it would allow your US dollar funds to earn a potentially higher yield while waiting to be deployed.
You can access the FSMOne USD Auto-Sweet account by opening an account with FSMOne now.
This advertisement is purely for informational purposes only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. It should not be relied upon as financial advice. Any securities, funds or products mentioned herein are for illustration purposes only and should not be construed as a recommendation for investment. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in funds are not deposits in, obligations of, or guaranteed or insured by iFAST Financial Pte Ltd ("IFPL").
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