Phillip SMART Park review: Earn higher yield on your savings

What is Phillip SMART Park?

In simple terms, Phillip SMART Park is a cash management account that gives you a yield on your spare cash.

This yield is obtained by investing your spare cash into underlying money market funds.

As its name suggests, it is a product offered on the Phillips’ Online Electronic Mart System (POEMS) trading platform.

Let us dive deeper to understand more about Phillip SMART Park.

What is the return on Phillip SMART Park?

The SMART Park account generated a 7-day annualised yield of 3.0540% p.a. for Singapore dollar funds and 4.6443% p.a. for US dollar funds as of 31 July 2023. 

How does Phillip SMART Park work?

When you put your money into Phillip Smart Park, your Singapore-dollar funds will be invested into the Phillip Money Market Fund. 

Your US Dollar funds will be invested into the Phillip US Dollar Money Market Fund A.

The Phillip Money Market Fund is one of the larger Singapore-dollar denominated money market funds, with a fund size of S$1,015 million as of 31 May 2023. 

The investment objective of the Phillip Money Market Fund is to produce returns comparable to the Singapore dollar savings deposits, while aiming to preserve principal value and maintain a high level of liquidity.

The fund invests in a diversified portfolio of short-term, high quality money market instruments and debt securities, which are normally only available to large investors.

Based on the Phillip Money Market Fund factsheet, about 64% of its funds were invested into money market securities as of 31 May 2023. 

22% of the funds were put into fixed deposits, and 10% were invested in money market funds. The remaining 5% of funds were held as cash and accruals as of 31 May 2023 

You might be wondering what are these money market securities.

These would include short-term debt instruments issued by Central Banks, such as the Singapore T-bill and MAS bill.

It would also include short term debt issued by non-US commercial banks, such as the Canadian Imperial Bank.

As you can tell from the breakdown of money market securities below, the holdings are fairly diversified across various issuer types. 

The fund manager’s approach is to diversify across deposits of varying tenures to enhance returns. 

Why are the features of Phillip Smart Park?

#1 - Flexibility

There is no lock-in period for funds put into Phillip SMART Park, just like other cash management accounts. 

You can withdraw from Phillip SMART Park anytime and the cash will be back into your linked bank account on the same day. 

Also, you can quickly deploy the funds in Phillip SMART Park if you discover other investment opportunities on the POEMS platform. 

This includes a wide range of products such as stocks, unit trusts and ETFs. 

#2 - Diversification

Secondly, the Phillip Money Market Fund is highly diversified across money market securities and fixed deposits.

The money market securities are also diversified across issuers and tenure. 

These money market securities are issued by central banks, commercial banks, and companies across various industries. 

It is worth noting that the average credit rating of these issuers is A, which is considered by the credit rating agencies to be high credit quality with low default risk. 

How safe is Phillip Smart Park?

As with all investments, Phillip Smart Park is not entirely risk free.

In this case, it is possible that you may incur losses investing in the underlying fund, Phillip Money Market Fund.

While their mandate is to preserve the fund’s principal while maintaining liquidity, there could still be a risk of default by the issuers. 

However, the diversification of the fund and the high credit quality of the issuers means that it is still relatively safe to put your money into Phillip Smart Park. 

According to Phillip, it has not experienced any default since inception in 2001, as the fund’s credit management process is intended to select the highest quality debt issued by the highest quality companies. 

What would Beansprout do?

The advantage of Phillip SMART Park is that it is relatively safe, and offers you the flexibility to withdraw your cash or deploy into investments quickly. 

If you do not have an existing POEMS account and are interested in accessing the Phillip SMART Park to earn a higher yield on your savings, you can click here to set up a POEMS account.