Should You Consider Tiger Brokers' Cash Plus?
Tiger Brokers has just introduced their newest service, Cash Plus, for investors in Singapore to invest their funds in. Could this be a viable avenue for storing your investment war chest monies while waiting to pounce on opportunities in the stock market? I examine it in this article to find out if it's worth our while.
Simply put, Cash Plus is a cash management service offered by Tiger Brokers, in collaboration with LionGlobal Investors Limited. Your funds will invested into the LionGlobal Managed Reserves Fund, with the aim of providing investors a yield that's higher than what they might get in their savings account, while still maintaining liquidity for you to use your funds at any time.
This liquidity is useful because if you're waiting to capitalise on a crash like last year's - or even a sector-specific correction (such as the ongoing China tech equities crash) - then you'd want to be able to quickly transfer your cash into your brokerage account to pick up beaten-down stocks that you've been eyeing. Especially if the crash is short-lived, in such cases, the liquidity will then prove invaluable.
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| Largest declines in US Stock Market History |
In this case, Tiger Brokers users with funds in Cash Plus will be able to transfer almost immediately into your prime account for trading.
So if you're already an existing Tiger Brokers user and you have idle funds - such as funds you're reserving as your investment war chest - you might want to explore this as a way to earn a higher yield on your cash.
What is the LionGlobal Managed Reserves Fund?
The fund is a special collaboration between both companies, and will be used to invest in highly liquid assets i.e. government bills, high grade treasuries, corporate bonds and established funds. If you want to read more about the individual underlying funds, you can check out the SGD-domiciled versions here, here and here.
Since LionGlobal Managed Reserves Fund is new, there is little historical yield information to reference. Instead, you should note that the estimated yield provided by Tiger Brokers is currently at 0.8*%, which is, of course, subject to changes depending on the underlying fund performance.
*As of 8 October 2021
Is it safe? What happens to my funds?
Cash management services are not new, and robo-advisors similarly use LionGlobal too for their own cash management services.
Your funds will be deposited into segregated trust accounts with a local MAS-licensed bank, which are held separately from Tiger Broker's own funds.
How do I know how much I've earned from Cash Plus?
Instead of paying out earnings, you can check your gains on your Net Asset Value (NAV), and lock in any capital appreciation upon you transferring your money out of Cash Plus.
What are the fees?
While there are no fees charged by Tiger Brokers for this, do note that the fund itself has a 0.5% p.a. management fee.
There are also no fees when you transfer in or out, unless you need it urgently (in this case, you can opt for their rapid transfer-out service with a 0.05% fee).
The minimum transfer-in amount is just SGD1 / USD 1 / HKD 5, and there's no cap on how much you want to park in Cash Plus.
However, note that the limit for rapid transfer-out services is capped at SGD 100,000 / USD 100,000 / HKD 500,000 per day, and the service fee of 0.05% levied on your total rapid transfer-out amount will apply.
What are the risks?
Your funds in Cash Plus are neither principal-guaranteed nor protected by SDIC.
Should the fund underperforms, there is a small chance that you might lose some of your capital if you were to redeem your units then. (However, given that the underlying funds are low-risk products, the chances of losing your capital is minimal, compared to most other investment products.) The same logic applies that if the fund were to outperform, you will likely be earning higher yields on your capital than if you had left it in the bank.
Conclusion
So, is it worth exploring Tiger Brokers Cash Plus?
By now, most Singaporeans should be fairly comfortable with cash management products. Given their popularity in recent months, I won't be surprised if investors who are already using Tiger Brokers will go for this.
After all, if you're already an existing Tiger Brokers customer and with investible funds that you have yet to put to work, you might want to consider this as an option for your idle funds.
Sponsored Message from Tiger Brokers
Cash Plus is Tiger Brokers' newest wealth management service offered to create more value for our users. With just one click, you can now enjoy the benefits of securities investment and cash management solution with Tiger Brokers. Read more about Cash Plus here.
For instance, if you transfer USD 100,000 on 8 October and maintain your account balance until 25 October 2021, you will receive USD 46.57 (1% annualized over 17 days). But if you were to subsequently transfer another USD 200,000 into your Cash Plus account on 10 October, and maintain your total account balance of USD 300,000 until the end of the campaign, you will receive an additional USD 82.19 (1% annualized over 15 days), meaning you'll receive USD 128.76 in total.
You can find Cash Plus in your Tiger app under "My" --> "Cash Plus Account" --> "Open" --> "Transfer-in". To transfer your funds out, simply follow the same steps but select "Transfer-Out".
Cash Plus is available in SGD, USD and HKD.
Disclaimer: This article is written in collaboration with Tiger Brokers.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
The information herein is for recipient’s information only and not an offer to sell or a solicitation to buy. All opinions expressed and facts referred to herein are subject to change without notice. Investment involves risk. The price of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. Past performance is not a guarantee of future results. Before making an investment decision, you should speak to a financial adviser to consider whether this information is appropriate to your needs, objectives and circumstances. Tiger Brokers assumes no fiduciary responsibility or liability for any consequences financial or otherwise arising from trading in securities if opinions and information in this document may be relied upon.
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