$$$ KPO and CZM $$$: StashAway Simple™ - Cash Management Portfolio

Monday, November 18, 2019

StashAway Simple™ - Cash Management Portfolio

StashAway launched a cash management portfolio called StashAway Simple™ today and it definitely looks very attractive at first glance! The email I received this morning.

1.9% interest is huge without doing anything (salary crediting, giro, credit card spending, etc.) and can be used as an additional savings account once people have maxed out their main savings account (You can read how we maximize our Multiplier account here - DBS Multiplier + SSBs + Joint Account = Higher Interest!). More so after Citi MaxiGain got nerf and it has higher interest and is more liquid than SSB. Having said that, at the back of my skeptical mind, I got to check it out in detail.

I logged in to my account and see StashAway Simple™ - Earn 1.9%, no lock-up, no catch. Clicking "Get Started" and I was shown this page.

From here, we can see that the money that is "deposited" to this account will be invested in these 2 funds - LionGlobal SGD Enhanced Liquidity Fund and LionGlobal SGD Money Market Fund. It is interesting to note that that interest will be accrued and reflected on a daily basis and not based on what the bank does - daily average balance. You will also receive a rebate on a quarterly basis.

After creating an account, similar to all its portfolio, one will be able to look at the breakdown of the assets and we can see that the 2 funds are weighted 50% each. Here comes the weird part, the returns for both funds are lesser than 1.9%, so how are they providing a 1.9% projected return even if there are no fees? Honestly, I have no idea but my guess is they might be topping up the difference in order to capture more users (those that are more risk-averse) and eventually, these people will also invest on the same platform by transferring the money to the other portfolio. According to Amanda's response at the end of the article, StashAway is providing a 100% rebate on the fees to provide a higher return.

Another thing that I would like to point out is since this isn't really a savings account and the underlying are funds, there will be volatility or the capital isn't guaranteed. LionGlobal SGD Enhanced Liquidity Fund is a pretty new fund (inception date: 30 Nov 2018) so let's just ignore that first. On the other hand, LionGlobal SGD Money Market Fund has a much longer history, if you head over to the fund page, you will be able to download their historical pricing from 01 Sep 2009.

Using a simple formula on excel to compare today's price against yesterday's price, one will be able to see the volatility of the fund prices (not much but it is definitely there). In addition, it is unclear how the fees will work, do they deduct first and refund every quarter since it was stated above that there will be a rebate every quarter.

Regardless, we will not be using it because we do not really have much spare cash lying around and our Multiplier accounts are nowhere near the limit. If you have spare cash and do not mind the volatility or are already investing in these funds on other platforms (the banks, dollardex, fundsupermart, etc.), it is definitely better to switch over to StashAway Simple™.

### Updated with Amanda's response (she is the Head of Client Engagement & PR for StashAway)

Need a second opinion? Take a look at WhatCard's article - StashAway Simple: It is not that simple.

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  1. Hey KPO,

    I dug a little and someone also asked the same question. Their answer to that is "The Unit Trust manager rebates 50% of the fee they charge to StashAway, and we rebate 100% of it to our customers every quarter" which explains their higher projected returns.


    1. Hi Kevin,

      Thanks for your comment! Amanda provided the same response and I have updated my article to reflect that too.