Phillip SMART Park Review: Access one of Singapore’s largest money market funds
05 May 2023
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 interest rate on Phillip SMART Park?
The SMART Park account generated a 7-day annualised yield of 2.7128% p.a. for Singapore dollar funds and 3.7450% p.a. for US dollar funds as of 24 April 2023.
How does Phillip SMART Park work?
When you put your money into Phillip Smart Park, you 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$988 million as of 31 March 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 51% of its funds were invested into money market securities as of 31 March 2023. 16% of the funds were put into fixed deposits, and 10% were invested in money market funds. The remaining 22% of funds were held as cash and accruals as of 31 March 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 and Kookmin Bank Hong Kong.
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.
How do the returns of Phillip Smart Park compare to other cash management accounts?
The return on the Phillip Money Market Fund is lower than some other money market funds, such as the Fullerton Cash Fund offered by other cash management accounts, based on the 7-day annualised return as of 24 April 2023.
This might be because the Phillip Money Market fund has a higher cash holding representing about 22% of its asset under management as of 31st March 2023.
The higher cash holding could be intended to meet any short term redemption requirements by investors of the Phillip Money Market Fund.
As the cash holdings earn a lower return, the high cash holdings could explain the lower return for the Phillip Money Market Fund.
Phillip SMART Park Promo: Earn a bonus return of 1.5% p.a. for 30 days
Phillip SMART Park is now running a promotion where you will receive an additional 1.5% p.a. returns on top of the returns from the Phillip Money Market Fund.
This is for the fresh funds deposited into the Singapore dollar denominated Phillip Money Market Fund via the SMART Park account.
This promotion will run till 16 June 2023, so read on to find out how to qualify for this promo
What are the eligibility requirements for Phillip SMART Park promo?
In order to be eligible for the promo, you must be a new POEMS customer or an existing POEMS customer who has yet to opt into Phillip SMART Park before 17 April 2023.
Thereafter, you must opt into the excess fund management facility (SMART Park) and deposit a minimum of S$100.
The additional 1.5% bonus return has a few additional requirements you should be aware of.
Upon the first deposit, you will have 7 days to complete all deposits to participate in this promotion.
For example, if you deposited S$5,000 on the 3rd day after opting into SMART Park Facility, and deposit another S$3,000 on the 20th day, the 1.5% bonus return will only be applied to the first S$5,000 of deposits.
After 7 days, the 30 days holding period will begin. Upon fulfilling all the requirements, you will receive the additional 1.5% p.a. bonus return.
Do note that while the SMART Park returns come with no minimum lock-in period, there is holding period of 30 days to earn the 1.5% bonus return.
The additional 1.5% bonus return will only be earned during the 30-day holding period.
What this means is that after 30 days, your returns for cash deposited into Phillip Smart Park will revert to the net returns on the Phillip money market funds.
For example, if you deposited S$10,000 after opting into SMART Park facility and subsequently make a stock purchase transaction worth S$5,000 on the 15th day after your deposit, only the net balance of $5,000 will be eligible for the 1.5% p.a. bonus.
What this also means is that your initial deposit will be in the Phillip SMART Park for a total of 37 days, but you will only earn the bonus return of 1.5% p.a. for the 30-day holding period.
Also, the additional 1.5% bonus return is capped at S$10,000 of deposit
What this means is that if you put in more than S$10,000 into the Phillip SMART Park account, the excess amount beyond the first S$10,000 will just earn the returns from the SMART Park money market fund.
Also, the deposit has to be a fresh fund. This means that it needs to be cash transferred from the bank account, and does not include funds transferred from Phillip accounts, internal transfers, and sales proceeds.
The full terms and conditions of the promotion can be found here.
What would Beansprout do?
If you are an existing POEMS user, Phillip SMART Park would offer a potentially higher return on your idle cash while you are awaiting investment opportunities.
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.
However, the yield offered for Singapore dollar investments in the Phillip Smart Park is lower than some other cash management accounts and savings accounts, due to the higher cash holding of the Phillip money market fund.
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, then it might be worthwhile to take advantage of the promo which ends on 16 June 2023.
However, make sure you are aware of all the terms and conditions to be eligible for the promo.
Learn more about what we’re looking out for to choose the best cash management account in Singapore.
Alternatively, we can also consider high yield savings accounts to make our cash work harder. Find out which savings account offers the highest interest rate with our Cash Optimiser tool.
[Beansprout Exclusive] Earn a S$20 Grab Voucher when you sign up for a POEMS Cash Plus Account or Cash Management Account via Beansprout, make a minimum deposit of S$1,000 and opt-in for Phillip Smart Park and CFD facilities. Click here to apply and claim your voucher by filling in this form.
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