Short-term money market fund versus ETF

masonic

dont_use_vistaprint said:

I just converted my daily interest with Royal London to an AER and it appears to be currently sat at 4.69% Based on today's interest only of course. This is way higher than I expected is CSH2 doing  the same? I thought they would be closer to or just below the BOE rate 

today's growth / today's  balance  = 0.00012549 per day

(1 + 0.00012549)^{365} - 1 =  0.04687

Use the change over a month or similar. Interest will be a bit lumpy. Historically RL has achieved a slightly higher rate than SONIA.

SloughSally

I monitored the interest rate over 3 months after buying RLSTMMF in September it averaged 4.11%

eskbanker

SloughSally said:

I monitored the interest rate over 3 months after buying RLSTMMF in September it averaged 4.11%

And there was a 25bp base rate drop at the end of that period, so the annualised figure should be expected to be lower than that now....

InvesterJones

dont_use_vistaprint said:

I just converted my daily interest with Royal London to an AER and it appears to be currently sat at 4.69% Based on today's interest only of course. This is way higher than I expected is CSH2 doing  the same? I thought they would be closer to or just below the BOE rate 

today's growth / today's  balance  = 0.00012549 per day

(1 + 0.00012549)^{365} - 1 =  0.04687

Monday interest includes that earned over the weekend.

aroominyork

Here is a 3 month view (CSH2 in blue).

artyboy

Yes, I've noticed that CSH2 seems to ever so slightly beat the RL fund. Not enough that I'd use that as a significant deciding factor though. As can be seen from the graph, it also has slightly more volatility - presumably as a result of being a synthetic derivative based ETF. There are some interesting bounces when you look at it intraday. But again, not enough that I'd consider trading in and out!

masonic

artyboy said:

Yes, I've noticed that CSH2 seems to ever so slightly beat the RL fund. Not enough that I'd use that as a significant deciding factor though. As can be seen from the graph, it also has slightly more volatility - presumably as a result of being a synthetic derivative based ETF. There are some interesting bounces when you look at it intraday. But again, not enough that I'd consider trading in and out!

Synthetic would normally mean perfect matching of the index being tracked. But the ETF vehicle means that its shares can trade at a premium of discount to NAV depending on inflows/outflows.