Businesss, SMEs can enjoy better cash yield, save taxes with Fundsupermart strategy

SINGAPORE - Fundsupermart (FSM) helps SMEs and Business owners optimise their cash yield with a Corporate Cash Management Strategy used by multinational corporations.

Cash is the lifeblood that sustains all businesses. For SMEs cash means the difference between operations and liquidation. Till now, SMEs and business owners have few cash management vehicles beyond fixed deposit accounts or savings accounts. Cash in these vehicles have yielded low rates of return - annualised returns from 2000 to 2011 stand at 1 per cent for fixed deposits and 0.4 per cent for savings deposits (source: MAS, iFAST compilations).

FSM Corporate Cash Management Strategies are safe, liquid and proven to improve cash yield, tax free without compromising on the liquidity needs of SMEs and business owners.

By using FSM Fixed Deposit (FD) Alternative Portfolios, cash yield is improved dramatically at manageable risk. Chart 1 illustrates, from 2000 to 2011, the annualised return stands at 2.3 per cent, while the weakest quarter over the 12-year period returned -0.87 per cent, which it recovered in the subsequent 6 months (source: iFAST compilations).

The strategy of using low-risk funds to enhance assets is used by large corporations, including Singapore Press Holdings, which holds S$259 million in investment funds, as disclosed in their 2011 Annual Report.

Other corporations who manage short term assets with funds include Microsoft and Mastercard.

This strategy works well for corporates of any size, from multinational conglomerates to enterprise startups. By utilising unit trusts, companies gain access to global fund managers' expertise in a diversified and high quality range of corporate and sovereign bonds and short term cash equivalent instruments. As at end-April 2012, iFAST Corporation Private Limited, the parent company of Fundsupermart, holds S$8 million in money market and bond funds.

Key features of the strategy include:

- Better yields: our fixed income solutions provide much better yields than savings and fixed deposits

- Tax savings: unlike fixed deposit where interest income is taxable, there is no capital gains tax on unit trusts

- No minimum lock-in period: the cash in these portfolios can be withdrawn as soon as you like

- Online access: all transactions can be carried out online, and you can also monitor the growth of your portfolio online

- No sales charge: You pay nothing upfront just like savings and fixed deposits