SINGAPORE, 29 AUGUST 2022 – Asia’s largest private market exchange ADDX has launched a cash management tool that allows investors with excess funds in their wallets to earn interest, instead of letting their cash sit idle. Named ADDX Earn, the solution aims to withstand short-term volatility while preserving capital.
The product line was curated to boost the returns of investors who have deposited money in their ADDX wallets, but have yet to decide on which private market product to take part in.
Gerard Lee, Chief Executive Officer of Lion Global Investors, says: “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.”
Some of the idle capital may also have come from previous investment earnings on 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.
Lion Global Investors
The first two funds to be launched under the ADDX Earn umbrella are by Lion Global Investors, a fund manager that is a part of the OCBC Group.
The LionGlobaI SGD Enhanced Liquidity Fund and LionGlobaI USD Enhanced Liquidity Fund are invested in high-quality portfolios of debt instruments, diversified across a wide range of issuers and tenors while maintaining weighted average credit ratings of “A”.
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.
In addition, the funds target low-volatility assets, which are 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 31 July 2022, 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.
Low-risk, Money Market Funds
ADDX Chief Executive Officer Oi-Yee Choo 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.”
“ADDX Earn represents an expansion of our product range in our constant effort to improve as a private market exchange through observing and responding to investor behaviour and need. It is an important building block in the financial services ecosystem we are constructing that is designed for investors, and not just for large corporations.
"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,” adds Oi-Yee Choo.