When i first heard about the Endowus Cash Smart Portfolios, i have to admit i was pretty intrigued. In the current environment, any product that can match the interest given from saving accounts would be a welcome addition to the team.
For the unaware, Endowus Cash Smart Portfolios aim to balance out liquidity, capital preservation, and provide superior yields. This is done by investing in fixed income instruments such as Money market funds, Fixed deposits, Bonds, and Bond derivatives.
For readers who have not heard about said product, do check out our earlier article here. In it, we delve deeper into what constitutes these products, and the risk-reward you can expect.
Secure, Enhanced, Or Ultra
I had previously been using my OCBC 360 account to hold my spare cash. This was a relatively hefty sum of S$50K which was reserved for market opportunities.
Sticking to OCBC’s 360 account would avail to a rate of 0.45% on my warchest. The Cash Secure Portfolio, while not exceedingly better, would at least provide a higher return.
Cash Secure prioritizes capital preservation and liquidity over yields. It invests primarily in ultra short/short term fixed deposits and bonds, greatly reducing (upcoming) interest rate risk.
However, this also means that yields aren’t as attractive compared to other fixed income products out there. It takes 4-6 business days to receive redemption proceeds upon request.
Without further ado, here are the results.
As expected, returns aren’t amazing, but they still edge out saving accounts, without any excessive hoop-jumping. A gain of 0.11% over 2 months would supposedly equate to a yield of about 0.7% in a year.
But this is all assuming interest rates remain low, which seems rather unlikely at the moment. As rates rise, this portfolio should also benefit swiftly as most of their investments have a short maturity period.
I should mention that i didn’t experience any negative returns at all during this period. Which is one of the plus-points of this product. Fixed deposits can’t be traded on the secondary market, and bonds lasting less than a year probably don’t get much screen-time either.
Of course, if you’re expecting a windfall, then you’re looking in the wrong place. While you won’t get rich investing in this, you would at least be making your money work hard for you.