FSMOne: MMF is better than ELF better than Autosweep account?

 

I have previously talked about how I have parked some cash in the FSMOne S$ autosweep account only to find that I am charged a "Management Fee" for the Autosweep account.

When you dig deeper into the Autosweep account, you learn that the autosweep account invests 90% of the funds in the iFAST Enhanced Liquidity Fund (ELF) with the remaining 10% in a cash account.

https://secure.fundsupermart.com/fsmone/article/rcms323940/ifast-enhanced-liquidity-funds-higher-returns-with-same-day-access

When you look at the ELF, you learn that FSMOne classifies it as a Short Duration Fixed Income fund (and not a money market fund) with an expense ratio of 0.31%. And guess what the fund holds - a lot of Money Market Funds (MMF), together with some sovereign debt and bank fixed deposits

I am not exactly sure if this kind of portfolio is worth the 0.31% expense ratio. There is also nothing that says that they receive a management fee rebate from Fullerton or LionGlobal whose MMFs are inside the portfolio, which means that this expense ratio should be in addition to the expense ratio of the underlying funds. One possible reason investors may prefer the ELF rather than buying the MMFs directly is that ELF, being an iFAST product, offers T+0 settlement (sell before 10am, credited end of business day). But to me that's neither here nor there for me, since it doesn't get credited fast enough to buy stocks during HK/SG trading hours.

Since I am on Diamond+ tier and do not pay platform fees for unit trusts (such as the ELF or MMF), it makes more sense for me to buy MMFs and to leave whatever is needed for ETF purchases. 

The autosweep account can be used to fund RSP of ETFs which is a great thing since you get above average interest while the funds are parked there. Since the interest rate is decent but not as high as an MMF (for the reasons shown above concerning expenses), I don't mind leaving enough for a few months' worth of RSP (versus trying to 'optimise' by moving funds into the autosweep account 4 times a month for the RSPs - another advantage of RSP is that it can happen 4 times a month, which probably reduces the impact of predatory algorithms frontrunning FSM's market orders on RSP days).

Conclusion

Rather than leaving a whole bunch of cash in the Autosweep account, I am moving them to

(i) Fullerton and Lionglobal MMF (0.17%/ 0.31% expense ratio)

(ii) LionGlobal All Seasons fund (standard) which is a 30/70 balanced fund with 0.48% expense ratio. This is pretty competitive considering what the All Seasons fund holds, compared to LionGlobal's own MMF.