United Funds Management

News

Update Cash Management Fund and the Bank Guarantee

28th November 2008

United Cash Management Fund - update on the Federal Government guarantee

As previously communicated in our Adviser Bulletin dated 20 October 2008, the United Cash Management Fund (Fund) is currently 100% invested in securities eligible for the Federal Government's guarantee program. 

Subsequent to our last correspondence, the Government has announced that from 28 November 2008, a fee schedule will apply to the guarantee of deposits, and selected money market securities from approved Australian Deposit taking institutions, with a value of over $1 million.

At this time, the Fund will not be subject to the fee and will therefore not be guaranteed, however:

  • we will continue to invest only in the highest rated money market securities
  • we will invest only in securities that are eligible for (but have not received) the Federal Government's guarantee and that are suitable for investment under Standard and Poor's AAAm Cash Management Fund rating criteria.

Subject to market conditions, we may in the future choose to have a portion of the Fund, or the entire Fund, guaranteed. We will continue to keep you informed of our decisions regarding this.

The underlying assets of the Fund are 100% invested in bank instruments from ANZ, Commonwealth Bank, National Australia Bank, St George, Suncorp Metway and Westpac. 

Standard and Poor's AAAm Rating

We are pleased to confirm that, in September 2008, Standard & Poor's reaffirmed its 'AAAm' rating on the Fund - the highest credit rating available to a cash management trust. The 'AAAm' rating on the Fund indicates that the safety of the Fund is excellent and that it has an extremely strong capacity to maintain principal value and limit exposure to loss.

What does the Standard & Poor's AAAm rating mean?

  • At least 75% of the portfolio must be invested in A1+ rated securities - the highest short term money market security rating available.
  • At least 10% of the portfolio must be maturing within 7 days at all times.
  • At least 50% of the portfolio should be held in the form of highly liquid assets; defined as bank issued securities rated A-1+ and A-1.
  • The average maturity of the portfolio should be maintained within a relatively short time frame, with a maximum weighted average maturity of 70 days.
  • A maximum of 33% of the portfolio be exposed to a single A1+ rated counterparty.
  • A maximum of 25% of the portfolio be exposed to a single A1 rated counterparty.

Current and future investment strategy of the Fund

The key considerations for the suitability of assets within the Fund's portfolio will continue to be as follows:

  • The Fund will continue to invest in the highest quality securities in the market that are eligible for the Government guarantee.
  • The Fund will continue to invest 100% of its funds in assets defined as highly liquid by Standard and Poor's.
  • The Fund will continue to provide investors with ready access to their funds.
  • The Fund will continue to provide investors with a steady competitive yield.

We will continue to adopt this approach in order to provide security on your investment while delivering competitive returns and ready access to your funds.

If you have any queries about the Fund or the underlying assets, please contact Charles Kneale on 0417386467.

The information on this site is general information only and does not constitute personal financial product advice, including a recommendation to invest in any financial product referred to on this site. The information on this site does not take into account any investor's particular investment objectives, circumstances or needs. Before making any investment decision based on the information or products referred to on this site, investors should consider whether they are appropriate to their needs or consult a financial planner for professional advice.