What is a cash management fund?

If you have spare money in your securities account and don't want to take the additional risk of market volatility, how can you use the money to earn extra income? Cash management funds might be a good choice.

The cash management funds mainly invest in short-term money market instruments, such as short-term government debts and certificates of deposit. Cash management funds have relatively lower risks and higher safety compared with stock funds and bond funds.

Many third-party fund companies provide cash management funds on the moomoo App. Yields will start to be calculated after the fund company confirms the shares and will be paid out on each trading day. In the case of holidays, the confirmed shares will be calculated normally, and the proceeds will be accumulated to the next trading day.

First, instant deposit and withdrawal. Investors can buy cash management funds using available funds in their securities accounts at any time and can also redeem the funds when they need to use cash available at any time. The redeemed funds can be used immediately for stock trading or IPO subscriptions.

Futu SG may set a single buy-in limit depending on the fund's operation in terms of buy-in amount. At the same time, the fund manager has the right to suspend redemptions to control fund liquidity risk if a large-scale redemption occurs, at which point investors may need to redeem the fund on the next trading day.

Second, low threshold and zero fees. Cash management funds have a very low subscription capital threshold, starting from as low as S$/US$ 0.01. At the same time, the fund company has deducted the management fee from the fund assets, so investors don't need to pay additional fees when they subscribe and redeem.

Third, low risk. Cash management funds' investment targets are mainly short-term government debts, certificates of deposit, and other financial instruments with relatively low risk and high liquidity. However, the fund managers do not guarantee a certain profit or a minimum return.