Private market exchange ADDX, on Aug 29, announced the launch of its new cash management solution.
Named ADDX Earn, the tool will allow investors with excess funds in their ADDX wallets to earn interest instead of letting their cash sit idle. The solution also seeks to withstand short-term volatility while preserving capital.
According to ADDX, target returns for products under ADDX Earn are designed to be higher than short-term bank deposit rates – which is where many investors otherwise store undeployed capital.
The first two funds to be launched under the ADDX Earn umbrella are by Lion Global Investors, a fund manager that’s part of the OCBC Group. The funds, the LionGlobaI SGD Enhanced Liquidity Fund and LionGlobaI USD Enhanced Liquidity Fund, are invested in high-quality portfolios of debt instruments.
These instruments are diversified across a wide range of issuers and tenors while maintaining weighted average credit ratings of “A”.
In addition, the two funds have weighted average portfolio durations of less than a year, which gives Lion Global the flexibility to adjust portfolio allocations in response to changing interest rates and market conditions. Investors can redeem their investments through ADDX on a weekly basis.
Furthermore, according to ADDX, the funds target low-volatility assets, which are said to be well-suited for the current market environment that has seen increased volatility in other asset classes.
For both funds, interest is accrued daily.
As of July 31, the LionGlobaI SGD Enhanced Liquidity Fund had a weighted average yield to maturity of 2.22% p.a., while that of the LionGlobaI USD Enhanced Liquidity Fund was 2.38% p.a. These rates change monthly depending on the prevailing interest rate environment and the underlying assets held by the funds.
“Our liquidity funds are typically used by financial advisers and more recently by digital players. We are therefore delighted to have a private market exchange use our liquidity funds to provide a solution for their investors’ excess cash,” says Gerard Lee, CEO of Lion Global Investors.
ADDX’s CEO Choo Oi-Yee says, “Cash should never sit idle. This is especially true at a time when investors are turning to cash cushions as they carefully weigh their investment options amid rising inflation, a volatile market and an uncertain global economic outlook.”
“With ADDX Earn, we are presenting to investors low-risk, money market funds in a format that is liquid and reduces the likelihood of negative returns,” she adds.
Further to her statement, Choo called the new solution an “important building block” in the financial services ecosystem that the private market exchange is constructing for investors and “not just for large corporations”.
She continues, “We want to offer investors a full shelf of products – ranging from those with a higher risk-return profile such as hedge funds and venture capital, to those with a lower risk-return profile, such as real estate funds, investment grade bonds, as well as cash management solutions at the tail end of the spectrum, such as these two Lion Global funds.”