F&C is responding to investors’ demands for higher yielding cash vehicles with the launch of the F&C Sterling Enhanced Cash Fund next week.
The fund aims to provide higher returns than those generated by traditional money market funds, with an initial yield expected to be close to 6 percent. F&C predicts this vehicle will attract interest from institutional investors such as local authorities and pension funds eager to make their cash positions work harder.
Although enhanced cash funds are widely available in Continental Europe and the US, UK investors have been facing a lack of compelling investment opportunities to manage their cash balances more effectively.
Compared to some liquidity funds with a one-month LIBID target return, the new vehicle will be aiming for three month LIBOR plus 35 basis points gross of charges, calculated on a three year rolling basis.
“Our fund will provide easy access for both institutional investors and investment platforms to higher yields on short dated securities,” says Jason Kabel, associate director of treasury at F&C, who will manage the F&C Sterling Enhanced Cash Fund. “We believe our product is quite unique in the UK and a very attractive alternative to bank deposits and existing liquidity funds.”