We heard you talking about cash as one of the many investment options. Why do you offer such low cash returns when banks are currently offering 10 times the return on the same value. Are you skimming profits off the top of cash returns and only providing customers the left overs. Is raises the question as why a SMF wouldn’t be a better option and then invest directly with a bank.
Hey Peter, The published return for each of the Cash options reflects the historical performance (e.g. the previous 12 months) and is not a forward looking rate. The Cash options are invested in bank bills, deposits at call and short term deposits, with the return of these various instruments largely reflecting the official cash rate set by the Reserve Bank of Australia (RBA). As you are likely aware, the RBA cash rate target had been at a historic low of 0.10% from November 2020 to April 2022, with the historical performance of the Cash options largely reflecting this low rate. From May 2022, the RBA cash rate target has increased significantly to its current rate of 3.35% in February 2023. As the published performance of the Cash options is historical, the short term performance has begun to reflect the recent higher interest rate environment, while the 1 year performance still includes a significant period where interest rates were very low. Over the next 6 months, the published 1 year historical performance will begin to reflect more of the higher rates seen since May 2022. I trust the above information assists you in understanding the difference between the historical performance published for the Cash options and the current RBA cash rate. Thanks, Ash
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We heard you talking about cash as one of the many investment options. Why do you offer such low cash returns when banks are currently offering 10 times the return on the same value. Are you skimming profits off the top of cash returns and only providing customers the left overs. Is raises the question as why a SMF wouldn’t be a better option and then invest directly with a bank.
Hey Peter,
The published return for each of the Cash options reflects the historical performance (e.g. the previous 12 months) and is not a forward looking rate. The Cash options are invested in bank bills, deposits at call and short term deposits, with the return of these various instruments largely reflecting the official cash rate set by the Reserve Bank of Australia (RBA). As you are likely aware, the RBA cash rate target had been at a historic low of 0.10% from November 2020 to April 2022, with the historical performance of the Cash options largely reflecting this low rate.
From May 2022, the RBA cash rate target has increased significantly to its current rate of 3.35% in February 2023. As the published performance of the Cash options is historical, the short term performance has begun to reflect the recent higher interest rate environment, while the 1 year performance still includes a significant period where interest rates were very low. Over the next 6 months, the published 1 year historical performance will begin to reflect more of the higher rates seen since May 2022.
I trust the above information assists you in understanding the difference between the historical performance published for the Cash options and the current RBA cash rate.
Thanks,
Ash