ROBO-ADVISER StashAway will lower the projected interest rate for its cash management portfolio, StashAway Simple, from 1.9 per cent to 1.4 per cent from Sept 1, the startup announced in an e-mail to customers on Wednesday.
The decision is due to the current low interest rate environment globally, StashAway co-founder and chief investment officer Freddy Lim said in the e-mail.
"To stimulate the economy, global central banks keep lowering interest rates. Although this is great news for people looking to borrow money, the lower interest rates also make it more difficult to earn rates on cash," he said.
"After continued analysis of the economy and central banks' decisions, our investment team believes that interest rates likely won't go back up for the foreseeable future, meaning the underlying funds will be earning less."
Introduced in November 2019, StashAway Simple comprises the LionGlobal SGD Money Market Fund and the LionGlobal SGD Enhanced Liquidity Fund.
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It has no management fees, although investors are charged an average 0.2 per cent expense ratio fee by the unit trust managers, embedded within the projected returns, the startup had told The Business Times in November.
In the e-mail, Mr Lim said that the funds were "not performing as well" from a few months ago. But instead of lowering the rate then, StashAway had added a rebate to bridge the difference between the projected 1.9 per cent rate and the actual rate. StashAway Simple will keep returning 1.9 per cent until end-August.