CSH2 - viable cash parking ETF

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 doesn’t pay interest in cash balances (above the excellent 3% on £4k plus deal), so as interest rates rise and Freetrade’s 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 they’ve 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!

You’ve 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, it’s not an ideal solution as you’d have to wait a few weeks for the transfer.

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Which services in the UK market, other than Freetrade, do give you interest on the cash you have between investments?

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 isn’t that Freetrade doesn’t pay interest - it’s that you don’t currently provide access to a fund that will act as a an interest-bearing proxy.

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Yes, that’s a good call, but it’s quite a lot of effort and I’d prefer to just hold everything with the one provider.

I appreciate you taking the time to respond! :grinning:

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With rising interest rate it is now more important that Freetrade makes this type of ETF available

Yep… I’ve just moved 75% of my SIPP funds from Freetrade to BestInvest where it’s going to get 2.5% interest.

Really annoying because there’s 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!

You could have got 3% with Chip Instant Access Account and protected up to £85k

Chip is a good looking product, I’m in talking about cash in SIPP wrapper, which chip doesn’t support

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@Freetrade_Team
Please can we get CSH2

definitely be good to have this in freetrade, just curious how you getting 2.5% from BestInvest?

On Nutmeg I have “parked” 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 £100k 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

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@Viktor you made the point that FT’s rate is “excellent”, which in July 22 it was but things have moved on. The £4k upper limit is also unattractive

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totally agree, thanks for mentioning nutmeg, will give it a look

They just pay interest on cash balances - you don’t have to do anything, it’s automatic. As of 27 Feb, they’re now paying 3.1% interest!

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A money market ETF will solve these issues
@gswaroop

Exactly!

Is the annual fee ( 0.4% ) charged on cash holdings ?

@Viktor
@JamesBell
@EmilieGauthier

Can we earn some interest on cash in a SIPP by investing in a money market ETF like CSH2 to pay for increased PLUS subscription fee please ?
:pray:

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