Thought I was being clever holding spare cash in Lyxor Smart Cash CSH2 pending investment into long term ETFs.
I put £6k in CSH2 and sell/draw out £100 each week to allocate.
Have noticed for every £100 sold only £95 becomes available for allocation. £5 (5% disappears each week).
Wish I never allocated cash to this ETF for holding.
Anyone else notice this problem / loss?
I don’t think there is anything particularly wrong with your plan. To be aware if you buy and sell CSH2 too quickly (for example after only holding it for 1 day) then you might loose a very small amount in the bid/offer spread (but a lot less than 5%).
Only 95% of the expected sale proceeds is immediately available for reinvestment. The other 5% should appear in your cash balance at the start of the next trading window. Most platforms actually make you wait for the full settlement period (usually 2 days) before allowing you to reinvest anything at all for exchange traded products.
(Edited to remove my misunderstanding about when the remaining 5% becomes available, thanks to @P.H for the correction below).
We allow you to reinvest 95% of the expected proceeds in the same trading window in which your sell order executes. You can use the 95% to buy one or more ETFs via single-stock orders (only). Such buy orders must be placed in time for the daily window opening (2 pm.)
The remaining 5% of the sale proceeds are available after the trading window.
Note that you don’t have to wait for the trade to settle before you get the remaining 5%. You get it immediately after the trading window has closed. I presume this is because when you place the sale that the exact price won’t be known until the sale has completed. Given the deadline for placing a sale is 14:00, and trades tend to go through abou 14:45-15:00 the price could move quite a bit in 45 minutes (e.g. something like DAGB can fluctuate rapidly). Hopefully it doesn’t decline by more than 5% as that means IE will need to recoup some of the original 95% they gave you.
Our strategies are in the same ballpark. I wait for the CSH2 sale to settle and then allocate the full proceeds.
Had no problems at all. CSH2 continues to compound daily.
I use CSH2 to feed my ETFs , I like that it accumulates while I decide. Once sold 95% is available immediately … the remainder is available once the deal settles. Works for me while I DCA into run down ETFs eg REITS.
@Rishi
Hi there! I’m considering doing the same. How will this fund be affected if interest rates even out and/or start falling?
How much interest are you currently making?
Side not on this – Rumor has it** Lyxor Smart cash** was the most popular fund on InvestEngine in the last month!
That’s insightful. Out of interest, what are the least bought list of stocks, bonds and alternatives?
Hey Carl,
I’ll look to see what we can publish on this. We don’t want to put “Hot & Not” type lists out there each week but I personally find some of this stuff super interesting.
Generally speaking though I don’t think you’d be too surprised on less popular holdings…Bonds are less popular that Equities, certain providers have a lot more name recognition that other in the UK & the more niche or specialist ETFs the less widely held they are.
HiyaTom,
Me too because it gives excellent insight into the emotions of men (and women). The smart cash fund tells me lots of people are still uncertain about the market and piling cash.
Interesting to that they go for the distributing ETF and not the accumulative version.
Interesting what you said about provider recognition. I wouldn’t consider Lyxor to be the go to there if that was important
I can’t find any info on lyxor/amundi’s site that would help decide how to report the tax on this thing. It doesn’t help that it’s only listed on the professional side of their website, not retail.
I’m thinking xstr in a taxable account is the way to go.