Apr 13 2021, 02:05 PM
QUOTE(DragonReine @ Apr 13 2021, 11:47 AM)
Actually, no, technically speaking these fintech companies are working WITH banks rather than forcing them to compete.
That's because MMFs are in fact investing into FDs
and many of the fund houses that these fintech companies work with are the investment arm of banking/insurance groups.
MMF essentially are pooled funds that are invested into FDs (and maybe short term bonds), with "special" rates due to investing with large capital. Historically FDs and MMFs are usually about similar profits, it's just that in the past it's difficult for the average retail investor to invest in MMFs due to requiring fairly large initial capital. What fintech does is they play middleman, allowing individuals with poor cashflow to invest in MMFs by pooling resources together.
Fund houses have their own MMFs but usually not advertised widely because it's low profit for them and their agents XD
The reason why Versa is 'higher' than FDs is because our current banking interest rate environment is low + the underlying MMF of Versa, Affin Hwang Enhanced Deposit Fund (HWAEDEP) has corporate and government bonds mixed into its investments, which gives slightly higher returns than FDs at slightly higher risk.
In the past not everyone can touch the MMF as as barrier very high for minimum investment amount of RM10k~RM50k. Think of it as wholesaler.That's because MMFs are in fact investing into FDs
and many of the fund houses that these fintech companies work with are the investment arm of banking/insurance groups.MMF essentially are pooled funds that are invested into FDs (and maybe short term bonds), with "special" rates due to investing with large capital. Historically FDs and MMFs are usually about similar profits, it's just that in the past it's difficult for the average retail investor to invest in MMFs due to requiring fairly large initial capital. What fintech does is they play middleman, allowing individuals with poor cashflow to invest in MMFs by pooling resources together.
Fund houses have their own MMFs but usually not advertised widely because it's low profit for them and their agents XD
The reason why Versa is 'higher' than FDs is because our current banking interest rate environment is low + the underlying MMF of Versa, Affin Hwang Enhanced Deposit Fund (HWAEDEP) has corporate and government bonds mixed into its investments, which gives slightly higher returns than FDs at slightly higher risk.
Versa act as retailer making a pool so small fishes like us can invest RM1 minimum into MMF now. Then Versa will deals with the wholesaler.
It's a good thing and opportunity for small fishes to learn about finance. Otherwise old people still think putting money in FD is the only way to earn interest without the risk to lose money while stock market very high risk and so on.
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