As global volatility remains turbulent and investors stay on high alert it is timely to refer to the old adage: Cash Is King. BetaShares currently offers a variety of ways to help seek protection from the vagaries of the market, including a Gold Bullion Fund (ASX: QAU), Short Funds (ASX: BEAR,BBOZ,BBUS) and a series of Risk Managed Share Funds (ASX: HVST, AUST & WRLD). However, another very obvious (and popular) way of protecting a portfolio is to increase cash allocations.
Globally, we have seen Wall Street giants Citigroup recently issue cautious research notes and JPMorgan Chase & Co. suggesting investors should sell down portfolios during the recent upswings and go to cash. In a similar vein, HSBC was reported by Bloomberg on 5 March 2016 to have topped up the cash allocation in its asset allocation model portfolio from 6% to 17% on a 6 month view.
Now of course, there is nothing ground breaking about this reminder and many of you have been re-allocating to cash… in fact the highest inflows of any ETF on the ASX for the first 2 months of the year have been into our BetaShares Australian High Interest Cash ETF (AAA). Given its recent popularity, I thought it might be useful just to provide a quick reminder of this fund and its benefits:
BetaShares Australian High Interest Cash ETF (AAA)
The fund may appeal to investors who:
- Seek to earn attractive interest rates on their cash allocation;
- Seek regular income paid monthly;
- Seek a high level of security from a fund that invests only in cash deposits; and
- Seek the ability to access liquidity on the ASX like any other share.
Benefits of the AAA Fund
The fund offers some potentially attractive outcomes to investors including:
- Interest rate on the fund’s cash deposits, net of fees, currently 2.51%* (~50bps over the RBA cash rate);
- The fund’s assets are held in cash deposits with Australian Banks (WBC, CBA (via Bankwest), Bank of Queensland, Rabobank and ME Bank);
- No lock-in or notice period requirement to access funds as experienced in term deposits (funds are available 2 days after trading just like any share); and
- Distribution reinvestment plan available.
*Rate is variable. See www.betashares.com.au for up to date information. Excludes brokerage and the bid ask spread that investors incur when buying and selling units on the ASX.