Best Cash Management Account Singapore

 

Note regarding the best cash management account in Singapore above:

• Although we always strive to provide up-to-date information, we do not guarantee the accuracy of the data above. Please check directly from the product website for the latest offering.
• We may use referral links to offer promotions to benefit our readers. We may receive a commission if you sign up through one of our referral links.
• Unless explicitly stated, the interest rate offered by these cash management accounts is not guaranteed/fixed. It is a floating/target rate and will adjust up/down based on the market rate.
• Each cash management account offering has a different volatility level, and investors should be aware of the different risk profiles before making any investment decision.
• SDIC does not insure cash management accounts. Although relatively low, there is still a risk of loss on your principal.

How to Read the Data Above?

We compile the list of cash management accounts in Singapore by summarizing the offerings from various robo-advisory and brokerage platforms. Unless stated otherwise, the projected annual return is only a guidance, and the actual return will vary according to the prevailing interest rate movements.

We also provide the projected volatility index to indicate which offerings may expose investors to higher volatility. The higher the volatility, the higher the potential gain and loss on your money. We usually only put cash that we do not plan to use in the next two years in the higher volatility index offering. For short-term cash, we usually put it in the lower volatility products.

 

What are Cash Management Accounts?

Investing in cash management accounts means investing your money into cash, money market, and short-term bond funds to earn higher interest rates. Cash management accounts are designed to suit the lowest-risk profile investors, usually to preserve wealth and provide steady income. Due to the higher interest rates, cash management accounts are becoming a popular option for income-seeking investors to park their cash, as these accounts offer flexibility and liquidity.

For example, if you invest in Endowus Cash Smart Secure, you are investing in the underlying funds of this offering. In this case, the underlying funds are:

• 50% Fullerton SGD Cash Fund
• 50% LionGlobal SGD Enhanced Liquidity

Therefore, a $10,000 investment into Endowus Cash Smart Secure will give you $5,000 invested into Fullerton SGD Cash Fund and $5,000 to LionGlobal SGD Enhanced Liquidity.

 

Cons of Cash Management Account in Singapore

Cash management accounts are unique products but without their downsides.

Principal not insured

The cash management account in Singapore is not SDIC-insured. In the worst case, where the underlying funds collapse, you may not be able to recover your initial principal fully. However, this risk is very low for well-managed funds or those licensed with the MAS. But we just put it here for transparency.

Principal and interest are not guaranteed

Most cash management accounts invest in short-term instruments, meaning the interest rates they offer will fluctuate according to the prevailing market interest rates. In other words, the interest rates are floating.

It is good news when interest rates are still rising because the rates offered by these cash management accounts will continue to increase. Conversely, if interest rates fall, the interest rates offered by these cash management accounts will also drop rapidly.

Additionally, your principal is not guaranteed with cash management accounts because those that invest in bond funds will be exposed to the market dynamic of bond price, yield, and interest rates. However, this impact is relatively limited because cash management account in Singapore tends to invest in short-duration funds.

Liquid, but not so liquid

Withdrawal from cash management accounts usually takes days. This means that you should only park the cash that is not urgent into these accounts. For example, we do not recommend putting all your emergency cash into these accounts because you need access to it 24/7 in case of an emergency.

Please be aware of this withdrawal policy before investing in the cash management accounts.

 

Pros of Cash Management Account in Singapore

Cash management accounts offer a relatively simple way to earn higher interest rates on your cash. Although alternatives such as fixed deposits and treasury bills offer relatively high rates, they require investors to lock in their money for a fixed duration. Cash management accounts allow withdrawal at any time (subject to several days of withdrawal processing time) while offering relatively higher interest rates.

 

What to Look for When Investing in Cash Management Accounts?

Many cash management accounts from various robo-advisory and brokerage platforms offer different annual returns. Which should we choose? These are some of the considerations that you can take a look further when researching the offering.

Underlying funds

Cash management accounts will invest your money into one or more funds. We call this the underlying funds. This is where your money goes when you invest with the cash management account. Each fund has its investment objectives and will invest in different instruments and durations.

The simplest one is money market funds, which will invest primarily in bank deposits. This is the safest because banks are usually considered a safer financial entity. Paired with the short-term nature of the bank deposits, these funds are generally considered safer—for example, Fullerton SGD Cash Fund.

Some money market funds also invest in short-term government bonds, such as T-bills and high-quality short-term bonds. These funds are also considered one of the lowest risk profiles due to the nature of the short duration and the high-quality bonds they invest in. Some examples include Lion Global SGD Enhanced Liquidity Fund, Lion Global SGD Money Market Fund, and United SGD Money Market Fund.

Other funds with the objective of earning higher interest may invest in corporate bonds and other interest-rate securities. With the higher interest, the risk also rises here. However, the risk is still relatively low due to the short-term nature of these bonds (less than two years). Examples: United SGD Fund, Nikko AM Shenton Short Term Bond Fund, and LionGlobal Short Duration Bond Fund.

Additionally, the funds may be invested into different credit rating levels, as seen in the table below. Although all are considered investment grade, they have different rating levels, implying different risk levels.

Fund Name	Credit Rating
Lion Global SGD Enhanced Liquidity Fund	AA
Lion Global SGD Money Market Fund	AA-
United SGD Money Market Fund	AAA
United SGD Fund	AAA
Nikko AM Shenton Short Term Bond Fund	A-
LionGlobal Short Duration Bond Fund	BBB

Yield / Interest Rate

This should be straightforward: you want to invest in cash management accounts if the yield is competitive enough compared to other fixed-income alternatives such as high-yield savings accounts, fixed deposits, or t-bills. Even if the yield is comparable or slightly lower than t-bills, cash management accounts offer flexibility by having no lock-up period, which may suit some investors.

Please be aware that a higher yield usually implies higher risk. Understanding where your money is going when investing is essential, so please do not just choose the higher yield. Look at the underlying funds as explained above to ensure you are comfortable with the investment.

Platform Fees

You typically use a robo-advisory or brokerage platform to invest in cash management accounts. They all charge different fees. For example, Endowus charges an annual management fee of 0.15%, while StashAway charges an annual fee of 0.15% – 0.2%. Although relatively small, these recurring fees will add up over time.

Withdrawal Time

The main appeal of a cash management account is the higher potential yield and liquidity. Being able to access your cash in a relatively shorter time is what many investors look for when parking their money. However, different platforms offer different withdrawal processing times, typically taking several days. Please review each platform’s withdrawal policies before investing with them.

Platform Safety & Reputation

We believe it is crucial for the platform to have a separate custody account for their clients’ assets. This is to ensure that should the platform shut down, your assets are fine, and there is no force liquidation.

You should also look for platforms that are regulated by the MAS to ensure they are compliant with the financial regulations in Singapore.