With the exception of STI, the global equity markets haven’t been too kind in 2022. To hedge against a possible recession in the near term, I have also been selectively paring down some of my investments. As a result, the size of my idle funds has grown but this has presented other problems in itself – cash drag. It is not just a drag on my portfolio performance but also generating negative returns in a high inflationary environment. A potential solution would be to invest my war chest with moomoo Cash Plus to earn approximately 2.5% interest rate while waiting for market opportunities to present themselves. Here is my review of moomoo Cash Plus which offers cash management funds under the moomoo mobile app.
Cash Management Fund and Fixed Deposit
Moomoo Cash Plus is a new product offering that allows investors to invest into money market funds or more commonly known as cash management funds. This is not to be confused with fixed deposits which the common man on the street would be more familiar with.
With no lock-in period, redemption penalty and a higher potential return, there is a need that cash management funds serve. However, do note that this potential return is not capital guaranteed. This is because these funds typically invest in short-term government treasury bills and institutional bonds. Yes, even governments do default on their borrowings from time to time.
What is moomoo Cash Plus?
Specifically, the cash management funds available under moomoo Cash Plus are (i) Fullerton SGD Cash Fund and (ii) CSOP USD Money Market Fund. Since most of my readers hold their war chest in Singapore dollars, here is an in-depth review of the Fullerton SGD Cash Fund.
Diagram 2 shows that the 7-day yield of Fullerton SGD Cash Fund as at 29 August 2022 is 2.14%. I noted that the return has risen from 1.6% in Jul 2022 to 2.1% in Aug 2022 as a result of rising interest rates. While we complain about our home mortgage payments getting more expensive, cash management funds such as Fullerton SGD Cash Fund serve as a potential good hedge to mitigate some of this pain.
Do take note 2.1% is still lower than the 2.64% offered by the CSOP USD Money Market Fund but Singapore-based investors will have to take on FX risk on the latter. More impressively, Fullerton SGD Cash Fund has reported positive returns every year for the past decade as shown in Diagram 3.
Actually, there has not been a single negative monthly return since its inception in 2009. Such impressive results are primarily due to the nature of its underlying investments as shown in Diagram 4.
Investing in rock solid counters such as sovereign banks and government bonds have not only preserved the principal value of the fund, it has also resulted in healthy liquidity. What this means is that there is no lock up period and redemption is fast.
Who is moomoo Cash Plus suitable for?
I have been using moomoo as an online brokerage to buy and sell stocks ever since it launched in Singapore. The user experience has been relatively positive thus far and I am definitely not complaining one bit about its lower commission costs.
With moomoo Cash Plus, I now have a temporary place to park my war chest while I wait for an opportunity to deploy my funds into the market at the right moments. This is better than allowing it to sit idle and see its value get eroded by inflation.
Furthermore, the fact that redemption is fast and done on the same platform allows me to deploy my funds quickly into time-sensitive opportunities. On days when the markets are idle, such as weekends and public holidays, I take comfort that my money is still working hard by being invested in moomoo Cash Plus. There is even a SmartSave function which allows users to opt in to subscribe automatically to moomoo Cash Plus with their uninvested cash. Personally, I have not used this function as I like to have control over how I manage my idle funds.
For those who have just starting investing and are accumulating their war chest, you will be pleased to learn that investing in moomoo Cash Plus start from as little as just $0.01! With zero subscription, redemption and platform fee, this greatly benefits novice investors who park their idle funds with moomoo Cash Plus while figuring out their next move.
moomoo Cash Plus Promotion
As a new product offering, moomoo SG has thrown in some goodies. New moomoo SG users will receive S$2 cashback everyday up to $60 when they subscribe S$100 into moomoo Cash Plus for 30 days. Unfortunately, I do not qualify for this promotion as I have already joined the moomoo platform in 2021. Let’s not forget that new users are also entitled to the usual welcome bonus bundle of stock credits and vouchers offered by moomoo SG. Fret not, existing and new account holders can participate in this ongoing promotion:
- Subscribe $500 in moomoo cash plus and receive $8 cash coupon.
- Subscribe $1,500 in moomoo cash plus and $20 cash coupon and $10 fund coupon.
That’s right, if you have noticed, new users get to triple dip simply by subscribing to moomoo Cash Plus! Here is the sign-up link if you would like to store your idle funds/ war chest in moomoo Cash Plus.
Disclaimer: All views express in the article are the independent opinion of Heartland Boy. The information in this article is meant purely for informational purposes and should not be relied upon as financial advice. This article has not been reviewed by the Monetary Authority of Singapore.
When yield is mentioned, this is referring to the indicative 7-day annualised yield derived from the past performance of the USD money market fund and should not be viewed as an indicator of future results.
When no negative monthly returns is mentioned, the data is accurate as of 24 August 2022 and is derived from the past performance of the money market fund on moomoo cash plus and should not be viewed as an indicator of future results.