Gain hassle-free access to money market funds

The core inflation rate in Singapore reached a high of 4.4 per cent in June, affecting the prices of everything from transport to utilities and consumer goods and services. But what does this mean for your investment portfolio?

Inflation doesn’t just reduce your purchasing power – it can also eat into your investment gains, necessitating a rebalancing of your portfolio to offset the effects. In a recent in-app survey conducted by moomoo SG, 66 per cent of Singaporeans interviewed were concerned about the strong US dollar and high inflation.

To fight inflation, the US Federal Reserve (Fed) began its rate-hike cycle this year, raising interest rates by a total of 2.25 per cent or 225 basis points (bps) so far in 2022.

Observers expect the Fed to raise rates by another 2 per cent or 200 bps in the remaining months of 2022 to curb inflation and boost the US dollar further. According to moomoo’s trading data, Singapore-based investors increased their portfolio weighting to US dollar (USD)-denominated funds accordingly, with Gen X males, in particular, allocating a significant 52.3 per cent of their fund portfolios to USD assets.

JOINING THE MONEY MARKET

Among investors between the ages of 22 and 45, funds investment has been especially popular. With inflation on the rise, money market funds are preferred by many who seek shorter-term, lower risk, and lower cost vehicles to park their cash.

A money market fund is a mutual fund that invests only in cash and cash-equivalent securities – such as certificates of deposit, repurchase agreements and US Treasuries – which are known as money market instruments. Money market funds usually have higher credit quality and are considered an investment vehicle with stronger liquidity.

Compared to demand deposits, the potential returns from money market funds may reach up to 200 times. Some 65 per cent of investors on moomoo’s platform indicated a belief that currency settled in SGD might be more secure for their portfolio.

Across the different age groups of Singapore investors, moomoo’s trading data indicated that money market funds are dominant and the preferred investment to counter high inflation rates.

Among Gen X men, fund allocations were 86.2 per cent in money market funds, 12.9 per cent equity funds and 0.9 per cent in bond funds. For women in the same generation, the split was 75.8 per cent, 21.3 per cent and 2.9 per cent respectively.

Gen Y women allocated 25.8 per cent of their portfolio to equity markets, 73.1 per cent to money market funds and 1.1 per cent to bond funds. Their male counterparts had an allocation of 20.4 per cent to equity funds, 77.9 per cent to money market funds and 1.7 per cent to bond funds.

Gen Z men put 29.8 per cent of their portfolio in equity funds, 69.6 per cent in money market funds and a mere 0.6 per cent in bond funds. Gen Z women allocated 39.5 per cent to equity funds, 57.3 per cent to money market funds and 3.2 per cent to bond.

Despite the differences in allocation, one trend stands out – money market funds are the preferred vehicle for many investors who prefer a lower risk investment, whether they’re just starting out or already in possession of well-established portfolios.

Whatever your preferred portfolio allocation, it’s important to remember to diversify to hedge against risks, and to establish a regular financial or investment plan.

MOOMOO CASH PLUS: A FLEXIBLE OPTION

With the moomoo online trading platform, users get hassle-free access to money market funds without having to deal with high fees.

Moomoo Cash Plus aims to preserve principal value and maintain a higher degree of liquidity, while still producing a return on investment. Users can choose between two money market funds, one denominated in SGD and one in USD. Users can subscribe to moomoo Cash Plus and redeem the fund anytime they want. Funds can be withdrawn and deposited in a bank or redirected towards new investments such as stocks or initial public offerings without margin interests. No transaction fees nor interest will be charged.

To celebrate Singapore’s National Day, moomoo SG is giving users who subscribe S$100 to Cash Plus S$2 cash-back every day, up to a total of S$60, for the month of August 2022.

Inflationary pressures may persist but rebalancing one’s portfolio with the help of moomoo Cash Plus may help to offer peace of mind – and empower one to continue working towards their investment goals.

Find out more about moomoo Cash Plus promotions.

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