Royal London Short Term Money Market Fund Y Acc

Crazy_Diamond

I am thinking of putting a lump sum from a pension transfer into this whilst I trickle it into longer term investments over the next 6 months.  I was wondering though whether the interest is calculated daily, monthly or another period, so for exmaple if I withdraw after a few weeks whether I will loose interest?

I am trying to work out whether it is worth using this as an alternative to my AJ bell client acocunt which pays around 3% on univested SIPP funds.  I am also a bit confused over the interest as AJ Bell states the yield is 6.88% whereas HL states it is 5.13%. Any ideas?

Stargunner

The interest is added daily.
The interest rate tracks the SONIA rate, which is currently around 4.21%, plus you need to deduct any account platform fees.

Crazy_Diamond

Thank you.

dunstonh

 I was wondering though whether the interest is calculated daily, monthly or another period, so for exmaple if I withdraw after a few weeks whether I will loose interest?

It is not a savings account. It is a fund made up of around 80% deposits and 20% other assets. The interest on the underlying "investments" does not necessarily come in daily.  

It is benchmarked to SONIA but it is not a tracker fund and does not track SONIA.   Recent history shows it comes in at around 0.2x% above SONIA after the OCF & TC.   You would need to deduct your platform charge from that.

When you sell, you get the unit price at the dealing point.  That unit price will include interest accrued to date that has not been released as income yet (that applies to both INC and ACC units).

There is a very small liquidity risk.   The weighted average maturity dates of the underlying assets is 46.34 days.  If there was a run on the fund, a suspension could be put in place to allow those maturities to occur.  Its highly unlikely.  However, with STMM funds coming out of the cycle where they were attractive and gained extra money, you would expect withdrawals to increase as investors revert to more typical levels.

  I am also a bit confused over the interest as AJ Bell states the yield is 6.88% whereas HL states it is 5.13%. Any ideas?

Platforms use snapshot data.  The snapshot dates may vary (that goes for all data).
You also have different yield disclosures. Historic, current, forward-looking or yield to maturity

AJ Bell clearly does not show the current yield.  I would have said historic but RLSTMM never got anywhere near 6.88%.  So, it is not historic.  I am not sure where they got that from.

HL showing 5.13% is a historic yield figure but importantly, the HL website shows the information date as 09/08/2024.   So, like many platforms, their data snapshots are not necessarily up-to-date, which is why many people don't rely on platforms for their data.

RL are supplying 4.38% as current yield on live systems. 

The yield to maturity is 4.53% (as of 31st March 2025)

I would use SONIA plus 0.2% as a guide and that would be 4.21 +0.2 = 4.41% but note it will drop with each interest rate reduction.

cwep2

I have this account and I have been tracking it fairly regularly.

The fund can be bought and sold at one point in the day. I use iWeb (which has no platform/holding fees and £5 cost per trade). If I am buying or selling I am told to get the instruction in by 11am, and the deal confirmation comes in after 5pm but on the same day. If I gave the instruction to buy/sell after 12:00 noon, then this will be executed/done the following day at the following day's pricing point. 

I have been tracking it since January 2023, there has not been a single day in that time where the price went lower on the following day. The rolling yield looking back 90days up to 15May is 4.50% - the BOE rate was 4.50% for most of that time, with about a week at the latest 4.25%. It has slightly outperformed SONIA in that time.

I notice the 3 day yield dips a little over the weekend, probably a lot of people "Buy" on Friday and "Sell" on Monday so the price always nudges up a little more than average from Thursday>Friday and a little lower than 3 days worth of average Friday>Monday, but Monday is a couple of points higher than Friday so you still do well to have it invested there, but if I was putting more money in, I'd leave it in instant access and put into MMF on Monday rather than Friday to save a few pennies.

In simple terms the interest accrues daily by a slight increase in the price, so if you sell one day later you get more ££ which is roughly equivalent to the SONIA rate for the extra day x the amount invested.

Looking back over the year the SONIA rate was obviously higher than now for most of that time as it is very very highly correlated with the BOE Bank rate, so performance figures will reflect that, but no idea where the 6.8% figure comes from.

Be careful if your provider charges fees on the amount invested as this will subtract from the returns.

On-the-coast

dunstonh said:

I would use SONIA plus 0.2% as a guide and that would be 4.21 +0.2 = 4.41% but note it will drop with each interest rate reduction.

Coincidentally I checked my small holdings of this fund in my isa yesterday.  4.4% is my approx (annual equivalent) yield over the past 6.5 months

aroominyork

dunstonh said:

The weighted average maturity dates of the underlying assets is 46.34 days.  

Where is this info published please, and where can I see the equivalent for CSH2?

dunstonh

aroominyork said:

dunstonh said:

The weighted average maturity dates of the underlying assets is 46.34 days.  

Where is this info published please, and where can I see the equivalent for CSH2?

It is on the RL factsheet.

You won't find it for CSH2 as Amundi use synthetic replication for the fund rather than physical replication and then uses swaps (which is why many investors won't go near it as its higher risk than RL STMM and synthetic replication is a big turn off as you holding is reliant on the market counterparty being solvent).

It is a 100% US equities fund with tech shares making up 29.99%.  So, very different to RLSTMM

aroominyork

Thanks dunstonh. masonic has explained some of this before. I simply can't grasp the concept of how an equity fund benchmarks against SONIA. If you have the patience to try to explain...?

GeoffTF

aroominyork said:

GeoffTF said:

aroominyork said:

Thanks dunstonh. masonic has explained some of this before. I simply can't grasp the concept of how an equity fund benchmarks against SONIA. If you have the patience to try to explain...?

By not being and equity fund.

OK sm@rt@rse, you explain it. dunstonh said "It is a 100% US equities fund..." and the top ten holdings are Amazon, Meta etc. Over to you!

Sorry, you replied to that post before I deleted it. As I understand it, Amundi holds a portfolio of equities, and enters into contracts with Société Générale, Crédit Agricole, BNP Paribas and J.P. Morgan. These banks provide a euro cash return in exchange for the return of the fund's equity portfolio. If those banks go bust, the global financial system is in big trouble. There are measures in place to protect your investment if those banks do go bust. Collateral, insurance and money has to be paid up daily. Derivatives are used to convert the euro cash return of the base fund to Sonia, which is denominated in GBP. Nonetheless, it is all very complicated, and I do not pretend to understand all the details. The risk rating of the fund is 1, but that does not mean that it is risk free. Amundi had €2 trillion AUM when I last looked, by the way.

masonic

What GeoffTF said. Imagine you have an equity portfolio packed full of tech stocks and other growth assets, but instead of the wild ride and growth potential of that, you want to match the gentle incline of SONIA. So you approach an investment bank that is always on the look-out for ways in which to make more money and they agree to pay you a return linked to SONIA in exchange for them benefitting from the returns of the racy portfolio you are holding. All good providing that agreement holds up and both parties remain solvent. So why hold all those risky investments when all you want to do is match SONIA? Well, probably you are just trying to make the portfolio as attractive as possible to your counterparties.