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Can you suggest any “relatively” safe alternatives to fixed term cash for our SMSF fund which we keep out of shares in term deposits as “ballast” in case the markets crash or substantially correct. The interest rates currently on offer mean that our money is losing value by having it cash but with a pretty large share portfolio already we are reluctant to keep piling into overheated markets.
A: Thanks for the question.
If you understand the product and are comfortable taking on a bit more risk, look at some ASX listed bank hybrid securities. These pay a floating rate of interest that resets relative to the 90 day bank bill. They are, however, a capital instrument, so in a worst case scenario, you could lose your entire or close to your entire investment.
In the unlisted category, money market or enhanced cash products. Potentially, one of the funds offered by Smarter Money (https://smitrust.com.au/) or a fund that we have here at Switzer, the Halidon Yield Enhanced Fund (https://www.switzerassetmanagement.com.au/investments/halidon-yield-enhanced-fund/)
Hope this helps.
