Case Study 2

The client:

A Singapore government organisation

Background Information

This organisation represents one of the largest government institutions in Singapore. Like many Singapore institutions tasked with managing its own long-term finances, it was struggling deliver positive real returns on its investments. After 2006, deposit rates in Singapore fell below 1% while inflation neared 5%. Achieving positive real returns through deposits was now no longer a possibility. Many institutions became compelled to look for higher return alternatives.

One such alternative was our Singapore Dollar Money Market Fund. This institution was not ready to shift all its deposit assets into money market funds, probably due to a mixture of the novelty of this option (historically no need arose for such an arrangement) and the lack of necessity to have all funds available on an overnight basis. However, as we sat down to explore how to better reallocate their funds, it became apparent that by simply shifting their short-term funds out of bank deposits and into the money market fund, they were able to boost returns.

The Solution

The Money Market Fund was proposed.

Our Money Market Fund provided daily liquidity, gave higher than deposit rates, and has a historically stable track record. The track record was crucial for their investment committee to give the thumbs up to the fund as some of the directors were unfamiliar with the concept of a money market fund and was unsure about its viability. After explaining the investment processes behind managing the fund and our ability to manage risk, they were more positive on the idea. Initially, they started with a small amount of several million. However after tracking the performance for several months, the investment size was raised substantially approaching the $100 million mark.