ADDX has introduced a cash management tool for investors, which consists of a solution that aims to withstand short-term volatility while preserving capital.
The new ADDX Earn will provide one more option to investors with excess funds in their wallets to make interest, instead of their funds sitting idle, according to the statement.
Per the private market exchange company, ADDX Earn has been built to boost investors’ returns deposited in their ADDX wallets and has not yet decided on which private market product to take part in. It added that some of the idle capital may also have come from previous investment earnings on ADDX.
The plan of the new management tool is also to beat short-term bank deposit rates by providing higher target returns for products under ADDX Earn. Many investors usually store undeployed capital in short-term bank deposit rates.
“The first two funds to be launched under the ADDX Earn umbrella are by Lion Global Investors, a fund manager that is a part of the OCBC Group,” ADDX said.
The two funds named the LionGlobaI SGD Enhanced Liquidity Fund and LionGlobaI USD Enhanced Liquidity Fund, are diversified over a range of issuers and tenors through investments in high-quality portfolios of debt instruments.
‘The two funds have weighted average portfolio durations of less than a year, which gives Lion Global the flexibility to adjust portfolio allocations in response to changing interest rates and market conditions,” ADDX said.
According to ADDX, investments can be redeemed on a weekly basis.
The funds are also targeting low-volatility assets. These are being done as they are “well-suited” for the current market environment that has seen increased volatility in other asset classes, ADDX announced.
Interest is accrued daily for both funds. As of July 31, the LionGlobaI SGD Enhanced Liquidity Fund had a weighted average yield to maturity of 2.22% p.a., while that of the LionGlobaI USD Enhanced Liquidity Fund was 2.38% p.a. These rates change monthly depending on the prevailing interest rate environment and the underlying assets held by the funds.
Gerard Lee, Chief Executive Officer of Lion Global Investors, said, “our liquidity funds are typically used by financial advisers and digital players. We are therefore delighted to have a private market exchange use our liquidity funds to provide a solution for their investors’ excess cash.”
The SGX-backed ADDX was founded in 2017. It is currently serving individual investors from 39 countries across the Asia Pacific, Europe and the Americas – except the US.
The company has started using blockchain and smart contract technology to reduce manual interventions in issuing, custody and distributing private market products.