I know this is probably a stupid question, but I wondered why my Lyxor Smart Cash https://investengine.com/etfs/lyxor/csh2/ value goes up and down? I thought it was just investing to get close to the bank of England Interest rate, with a risk rating of 1, so I assumed only increases?
I am happy with the progress as it’s going up far more than down, but I was wondering what the small dips each day are? It always is a little less in the morning than it was the night before.
Although this fund tends to track the UK base rate, Lyxor Smart Cash is a Money Market fund, and if you look at the breakdown at what that invests in, although it’s primarily cash, it does include other slightly more volatile assets.
For instance it also invests in short term high quality bonds and other short term, low risk investments. It’s those that helps drive what should be a slightly better return than cash deposits, but as a result, will mean small amounts of volatility which is what you’re seeing.
Money Market funds are not without risk as a result, and you should check the breakdown of what they invest in as this differs from fund to fund. Whilst nowhere near as volatile as stocks or even bonds, they’re not as safe as cash - but still a good short term place to park money IMO.
CSH2 is not a money market fund - which is a highly regulated fund, often with a constant NAV.
The underlying NAV of the fund hasn’t gone down since the ETF was started in 2015 - this data can be downloaded from the Amundi website. Share price can deviate from NAV and this variance simply reflects supply and demand.