Savings account with 3.164% pa. What is IFAST Auto Sweep?

The stock market continues to recover in the month of June as the technology rally, which was first fueled by the rally of Nvidia, continues the momentum.  Meanwhile in Asia, the Chinese stock market remains lackluster as news of a continual fall in China's production price index had investors worried that demand for Chinese made goods remains sluggish. On the other hand, the US Federal Reserves signals that they might increase interest rates by another 2 more times by a measured amount. This lead to a small spike in interest rates around the world, while not negatively impacting the stock market as investors feel that small measured rise in interest rates will not derail the market and the end of the interest rate hike is coming to a stop. 

This lates development has lead to some attractive interest rates for money market funds. One of these fund is the Auto sweep fund that is managed by IFAST, and is currently giving an interest of 3.164% pa.

What is the IFAST Auto Sweep Fund

IFAST Auto Sweep is a fund made up of a combination of money market funds and cash holdings that combines the best of both worlds: The liquidity of cash and the interest rates of a money market fund. A traditional money market fund takes 3-5 working days to be liquidated as it has to go through a fund house for the withdrawal to take place. In the case of IFAST Auto Sweep, they keep a float of 15% of the portfolio in cash, in order to meet short term withdrawal. IFAST Auto Sweep comes in SGD and CNH for now. They are looking to launch a USD account soon with an interest rate of 4.5%pa.

IFAST Auto Sweep does not pay out an interest like a traditional bond, but work more like a fund where the interest is reflected in the value of the the deposit. The interest is also credited on a regular basis, where there is no lock in period and the interest is accrued based on how long you have deposited in the fund.

So if you have excess funds sitting in your bank deposit or want to get a higher interest on your emergency fund, the IFAST Auto Sweep fund can be a good avenue to deposit the money as it can be withdrawn back into your bank account quickly if the fund is needed urgently.

 

How to Enroll in Auto Sweep

All IFAST accounts, wrap or non-wrap comes with this Auto Sweep feature, but customers need to activate it. Customers need to log in to their IFAST account, and opt into the Auto Sweep feature.

Customer can than transfer money from one of the local bank to IFAST via internet banking bill payment and stating their account no. on the reference code. Once that is done, IFAST will credit the monies into the Cash Account. The customer can than login into their IFAST account and click on the "Cash Solution" section, and look for the "Transfer" tab. You can now select the Auto Sweep account which you want to transfer from. 

Refer to the video below for detailed instructions.

FAQ

Q: Will there be an entry fee or annual wrap fee or platform fee charged on the Auto Sweep account if it is part of a Wrap Account?

There will not be any entry fee, commission or wrap fee or platform fee, though there is a management fee of 0.2% pa charged for the Auto Sweep account.

Q: How do I withdraw my monies from Auto Sweep account? 

Customers can input the preferred bank account they wish for the monies to be credited and the monies will automatically transferred to the bank account once the monies are sold.

Q: Do I need the assistance from my adviser if I need to do any transaction in relation to the Auto Sweep Account?

The customer can do all the transaction on their own. The customer only need assistance from the advisor if they wish to use the monies from Auto Sweep account to purchase funds or they wish to sell their funds back into the Cash Account.

Q: Will we be able to fixed this interest rate for a longer term?

No. Auto Sweep account interest rates will be adjusted on a regular basis and will reflect the short term interest rate of that period of time. If you wish to lock in the current high interest rate, customer can check out Singapore Saving Bonds.

For more FAQ, you can check out the official FAQ from IFAST Website and you can find the factsheet in this link.

If you have any questions on the Auto Sweep fund, feel free to drop me a message.

Portfolio Performance

The portfolio performed very well for the month of June with a positive return:  +4.27% (Cash), 4.07% (CPF-IS), 4.11% (SRS). The general stock market rallied on weakening inflation pressure and relatively resilient US economy with consumers and business continue to show strength. The bond markets also rallied with expectation that the interest rate hikes will ease over time, while Emerging Markets outside of China continues to recover and benefit from the easing of global inflation pressure.

There will not be a change in the portfolio strategy as of now, though I am looking to move the current short duration bonds to a longer duration bond fund to lock in the higher interest rate. However, as interest rate trends are still on probably rising trend, abet at a slower speed, we will want to move into the longer duration bonds at the peak of the interest rate cycle.