While some trust nothing else but cash, others view even the smallest amount as inefficient. Although it’s a necessity in our daily lives and the first building block of every portfolio, cash is not as simple as it seems.
With interest rates and bank fixed deposits rates at a record low, there is an increase in interest and demand for higher yield alternatives. There are many short term instruments to store cash—savings accounts, fixed deposits, fixed institutional deposits, money market funds, and short duration bond funds. Hear from the experts in this live webinar to understand how best to use these funds for your cash needs.
0:00 Introduction to Endowus
14:46 Introduction to UOB Asset Management
17:55 Introduction to Lion Global Investors
23:35 Introduction to Fullerton Fund Management
29:02 Is Cash King, or is Cash Trash?
26:34 Shifts in Cash Management Markets - how demand have changed relative to bank deposits
43:35 Managing cash funds professionally and fund performance
56:34 QnA from Slido
57:45 Are there enough low-risk, high yield bonds to be invested in?
1:11:24 Where are interest rates headed?
1:16:33 Cryptocurrency vs Cash, King or Trash?
Excerpts from the Webinar:
Is Cash King, or is Cash Trash? (29:02)
Darren: Cash is definitely not trash. Depending on context, cash can be king. It depends on how we make use of cash. Cash is a form of capital preservation, a medium of short-term liquidity. From an investment perspective, cash was king in 2018, but that is not the case today. Cash can also be viewed as a safety net, alongside the idea of capital preservation. This is pertinent during the pandemic, where cash is needed.
Are there enough low-risk, high yield bonds to be invested in? (57:38)
Jessica: It is indeed challenging to find the right bonds to add to portfolio. Maintaining the credit quality of the portfolio name while ensuring good yield, is difficult hard but not impossible. We have to comb the market and be fast with our investment decisions. We also have to look at markets of different currency as well and hedge it back to SGD.
Joyce: The bond market is huge, as a fund manager the ability to cherry pick our yield is important for us. We try to be more creative in the process. We want to make sure that we have a close relationship with the bond issuers so that they will approach us when they have any new issuance.
While recent deals have tighter spreads, we also seize on opportunities in the secondary markets where counterparties who are in need of liquidity will approach us and we can bargain for better rates.
Sam: Where are interest rates headed? (1:11:24)
Darren: Globally, the US, Europe and China are doing well, stable and recovering gradually. Looking at data points, Singapore may look like we’re on the negative side. However, these numbers are stabilising and the economy is recovering. Interventions from the government such as the 100 billion put into the economy, the cheap loan banks are getting also aids in loans to SMEs. Together, inflation starts to have an uptake and interest rates will start to uptake gradually too.
Jessica: Over the short term, the recovery can maybe bumpy, as central banks like to err on the side of caution. However, it should be a gradual recovery in the long run.
Cryptocurrency vs Cash, King or Trash? (1:16:33)
Darren: It is an interesting new asset class and there is more acceptance by a broader audience. More people seem to be buying them and celebrities are buying in it. However, more regulation will be necessary for it to be used as an product. Instead of a mode of exchange, cryptocurrency is becoming more like an asset class on its own.