Have you looked at the Sanlam Liquid account?
Maya replies: The Sanlam Liquid account allows for online banking transactions, combining higher interest rates with some transaction facilities. The underlying investment is the SIM Money Market unit trust fund. There is a management fee ranging from 3,5% to 0,5%, depending on the amount invested. Interest rates quoted are after these fees have been deducted and interest rates on an investment of R30 000 or more are compelling. The investment is currently paying 6,92% on a R50 000 deposit, which is a good rate compared to money-market bank accounts. SIM has chosen not to apply to Moody’s for a CA rating due to the high costs. However, the fund does adhere to the rules of the Collective Investments Schemes Control Act (Cisca) which has conservative guidelines for money-market funds.
The SIM Money Market Fund invests in a range of money-market instruments which include negotiable certificates of deposit, bankers’ acceptances, debentures, Treasury bills and call accounts. On average, 95% of the fund is invested in F1+ rated securities and never invests in securities rated less than F1. (F denotes the Fitch ratings for short-term securities and are ranked F1+, which is a senior note, followed by F1 and F2). The fund may only invest in money-market instruments with a maturity of less than one year while the average maturity of the portfolio may not exceed 90 days. The fund does hold 5% corporate bonds (bonds issued by other SA corporates) but it is not invested in any securitised mortgages.
In conclusion, the Sanlam Liquid account is a very attractive account as it provides high interest rates while allowing for online transactions. However, be aware that a money-market fund, as opposed to a money-market account, carries some risk through investments-like corporate bonds. The fund manager would be managing these risks carefully.