As interest rates rise, we really need a ETF we can use to park cash balances where they will hold their value and generate a small return. Unlike its competitors, Freetrade doesnât pay interest in cash balances (above the excellent 3% on ÂŁ4k plus deal), so as interest rates rise and Freetradeâs competitors increase the interest they pay on cash balances, Freetrades low fees are at risk of being outweighed by the loss of interest.
We have access to various bond-based ETFS (ERNS, IGLT, etc), but theyâve all experienced much higher than usual volatility due to the high global inflation rates - so anyone parking cash in these will have seen their capital erode.
We really need something that behaves like a safe money-market fund - and while most of the UK money-market funds are OEICS, CSH2 (Lyxor Smart Cash) has remained highly stable, producing an effective return a little below bank rates, but with very low volatility.
If anyone knows of another ETF available on Freetrade that can fulfil this function, please let me know - otherwise do please give this a vote⌠0% on cash balances is going to kill our portfolios!
Youâve got my vote. I tend to keep cash in high-interest savings accounts but I can see why some may prefer a liquidity fund. Unfortunately, relatively low volume may be a stumbling block to adding this.
As a workaround, why not hold the cash element in a separate Sipp with say HL which pays interest and offers money market OEICs? You could then transfer across if/when you want to deploy it. Obviously, itâs not an ideal solution as youâd have to wait a few weeks for the transfer.
BestInvest and HL both pay interest on cash balances. And possibly more importantly, most of your competitors allow trading in OEICs, so cash balances can be parked in money-market funds and attract a safe rate of return.
As I said in my initial post, my issue isnât that Freetrade doesnât pay interest - itâs that you donât currently provide access to a fund that will act as a an interest-bearing proxy.
Yep⌠Iâve just moved 75% of my SIPP funds from Freetrade to BestInvest where itâs going to get 2.5% interest.
Really annoying because thereâs so much about the Freetrade platform I love, but there has to be a way for us to hold cash without it losing value rapidly!
On Nutmeg I have âparkedâ my investments into cash and receive the BOE base rate (currently 4%) less 0.75% fees, no upper limit. Interest paid quarterly. Their investment fees are 0.75% up to ÂŁ100k and 0.35% for anything above. Obviously a very different service to FT (and expensive), but in this particular case it is more advantageous if you are worried about volatility and want to exit the markets for a little while
@Viktor you made the point that FTâs rate is âexcellentâ, which in July 22 it was but things have moved on. The ÂŁ4k upper limit is also unattractive
