Introducing StashAway Simple™ Plus

13 July 2022

Here’s our cash management portfolio that earns a yield to maturity of 4.5% on your cash.

We’re excited to introduce our new cash management portfolio: StashAway Simple™ Plus. Simple Plus is our Singapore Dollar cash management portfolio that offers a yield to maturity of 4.5% on any amount you save.

Simple Plus offers a competitive rate with minimal risk

Risk management has always been a core principle of portfolio management at StashAway. So when designing Simple Plus, our investment team made sure you’d get the best possible rate while minimising the portfolio’s drawdowns as much as possible. 

What funds are in Simple Plus?

You might be familiar with the adage, “high risk, high return.” The reality is that this applies just as much to bonds as it does to tech stocks.

On one end of the cash management spectrum, you have risk-free options, such as savings accounts, which provide guaranteed rates. On the other end, you have investments in low-risk securities, such as money market funds and short- and ultra-short duration bond funds.

not all cash management 1

Simple Plus’s underlying funds fall under two categories: short and ultra-short duration bond funds. And the mix of the two provides you with the best possible return while keeping risk in check.

The three underlying funds for Simple Plus are:

  • LionGlobal SGD Enhanced Liquidity Fund (20%)
  • Nikko AM Shenton Short Term Bond Fund (20%)
  • LionGlobal Short Duration Bond Fund (60%)

Short duration bond funds drive the higher rate

Nikko AM Shenton Short Term Bond Fund and LionGlobal Short Duration Bond Fund are the short duration bonds contributing to the higher rate, but they also carry slightly higher risk.

Ultra-short duration bonds balance the risk

LionGlobal SGD Enhanced Liquidity Fund is the ultra-short duration bond fund that helps to balance the risk.

(Read more about the types of underlying funds in different cash management options and their associated risks.)

With a diversified mix of high-quality short and ultra-short duration bond funds with great track records, Simple Plus sets you up for a competitive yield to maturity. 

Given the current economic environment, are there heightened risks with Simple Plus?

In an economic environment with looming rate hikes, it’s possible that Simple Plus could experience short-term losses, especially if central banks raise rates faster than markets expect. This scenario occurred in late 2021 and the first half of 2022.

Simple Plus is a great low-risk investment option, though the potential short-term volatility wouldn’t make this the best place to park the cash you need in a couple of months. But if you’re looking for a solid place for your cash, Simple Plus could be just what you’re looking for.

What does the 4.5% yield to maturity actually mean?

Yield to Maturity (YTM) is the total return anticipated on a bond if held until maturity, inclusive of the interest payments you’ll receive and any difference in the current price of the bond versus its maturity price (which is the same at the point it is issued). It is expressed as an annual percentage rate. We always note the date at which the YTM calculation is based until.

We recommend a minimum of 12 months in order to allow for a large portion of the bonds to fully mature.

How long should I hold my cash in Simple Plus?

We recommend you hold your cash in Simple Plus for at least 12 months. Why? Remember, Simple Plus’s underlying funds can experience short-term volatility. So, be prepared to ride out short-term dips for longer-term gains.

Which cash management portfolio should I choose, Simple or Simple Plus?

All three Simple, Simple Plus, and Simple Guaranteed are cash management portfolios, so by default are considered ultra-low risk investments. 

While you may be tempted to go with the highest rate, remember: optimal cash management accounts for trade-offs between liquidity, risk and returns. Try answering these questions to see which portfolio fits you best:

What are Simple Plus’s fees?

The management fee for Simple Plus is 0.2% p.a. The fee will always be embedded in the yield to maturity, and the assets you have in Simple Plus won’t be included in your investment portfolio management fee calculation.

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