New fund gives investors fresh means to get higher yields on their cash holdings
Purpose Investments has introduced a new fund to expand its portfolio of market-beating cash solutions.
The Purpose Cash Management Fund is now trading on the Toronto Stock Exchange under the ticker MNY.
The fund was designed to utilize the current economic climate and convert rising interest rates into higher yields for investors' cash allocations. It employs the ground-breaking strategy Purpose pioneered with the introduction of the first high-interest savings ETF in history (Purpose High Interest Savings ETF - PSA) in 2013.
“We’re in a very challenging market environment this year, and with interest rates moving higher, we wanted to offer investors a new way to manage their cash and maximize their yield,” says Greg Taylor, Chief Investment Officer at Purpose.
The fund's yields are anticipated to rise in tandem with the Bank of Canada's anticipated rate hikes to combat inflation, providing higher yields than conventional cash alternatives while remaining consistent with other money market funds that provide safety and stability.
The fund is actively managed to ensure it meets its main goals of offering principal stability and alluring yields. As of September 14, the anticipated net yield for the Purpose Cash Management Fund is approximately 3.30%. The portfolio managers of the Fund will primarily concentrate on short-term, high-quality money market instruments and Canadian dollar cash, with a key focus on managing liquidity, diversification, and credit quality.
As investors seek out low risk and low volatility in the current unsteady markets, cash allocations in portfolios have been rapidly increasing.
“Investing in non-yield optimized cash options or allocating your money in longer-term deposits can be detrimental to your portfolio when inflation is rising faster than your returns,” says Vlad Tasevski, Chief Operating Officer and Head of Product at Purpose. “With the Purpose Cash Management Fund, we aim to provide investors with a way to capitalize off rising interest rates while maintaining daily liquidity.”
The Purpose Cash Management Fund offers a choice to other conventional cash alternatives. It can work well for investors looking to counteract the increased volatility of the bond and equity markets without becoming encumbered by guaranteed investment certificates ("GICs"), as well as a tool for bulk trading as it can be purchased and sold in large quantities without affecting the market.
“Given that the markets have been so volatile, the Fund will provide investors with a safe and attractive yield option for their cash balances,” Tasevski added.