PROJECTED RETURN ON INVESTMENT OF A MONEY MARKET FUND HOLDING SINGAPORE GOVERNMENT SHORT TERM SECURITIES.

 

Notes: Data Source: Monetary Authority of Singapore as of 15Aug25

Chart 1 (above) : Probabilistic Scenarios of Expected Annualized Rate of Return on Investment. P25 is 25% Percentile; Median is 50% Percentile, P75 is 75% Percentile.

Chart 2 (above) Comparison with SORA (Singapore Overnight Rate Average) which is a reference for Bank Savings Account rates. Current Savings Accounts rate is about 1.56 %

Results Summary

• Expected annualized return: about 1.93% (mean of the probability distribution).

• On SGD 50,000, the expected 1-year earnings are roughly SGD 963.

• Probability by bucket:

• 10% chance of 1.5% or lower

• 64.2% chance between 1.5% and 2.0%

• 34.5% chance between 2.0% and 2.5%

• 1.3% chance above 2.5%

Introduction: Fund mandate and portfolio

The money market fund considered is a Singapore dollar–denominated, capital-preservation vehicle targeting daily liquidity and minimal interest-rate and credit risk. Its portfolio typically holds a rolling ladder of high-quality short-term instruments issued or backed by the Singapore Government and the Monetary Authority of Singapore (MAS), including:

• MAS Bills (approximately 12-week tenor)

• Singapore Government Securities (SGS) Treasury Bills (around 6-month tenor)

• Cash and overnight placements to manage liquidity

The fund’s return profile is driven largely by prevailing cut-off yields at MAS Bill and SGS T-bill auctions, weighted by the fund’s allocation along the very short end of the curve, and adjusted over time as holdings roll and coupons reset.

Methodology

Methodology

• Split the dataset into two time series: MAS Bills at 3 months (12 weeks) and SGS T-bills at 6 months. Converted Auction Date to a proper datetime index and removed incomplete rows.

• Created an “SG short proxy” by aligning the 3-month MAS Bill and 6-month SGS T-bill auction cut-offs (nearest-date match) and averaging the pair when both were available.

• Estimated the fund’s current running yield as a blend reflecting a typical cash ladder: 60% MAS 12-week and 40% SGS 6-month, using the most recent available auction cut-offs.

Data sources

• “T Bills - Auction Data Table.csv.” This contains historical auction results including Auction Date, Tenor (months), and Cut-off Yield (%).
• “SORA.xlsx.” Used to cross-check rate trends and provide local-rate context.
• Previously prepared US T-bill series: Used as a comparative reference for short-rate conditions; not required for the core calculation but helpful to validate the level and direction of SGD short rates.

Scenario band and probability model

Built a scenario band (low, mid, high) from the last year’s dispersion in the SG short proxy, with a modest policy-tilt consistent with Singapore’s exchange-rate–based framework (NEER).

Converted the band into a triangular probability distribution: low = pessimistic bound, mode = mid, high = optimistic bound. Simulated a large number of draws to obtain the expected annualized return, percentile markers, and bucketed probabilities.

Key results (as shown in the chart)

• Expected annualized return: about 1.93% for the fund’s current positioning.

• For an investment of SGD 50,000, the expected 1-year earnings are approximately SGD 963 before fees and taxes.

• Probability distribution highlights:

• Roughly 10% probability of outcomes at or below 1.5%

• About 64% probability between 1.5% and 2.0%

• Around 35% probability between 2.0% and 2.5%

• Low probability (about 1%–2%) of outcomes above 2.5%

Interpretation and limitations

The results reflect a conservative, auction-driven approach anchored to MAS Bill and SGS T-bill cut-offs, which are the dominant drivers of SGD money market returns.

The triangular approximation is intentionally simple and transparent; it captures near-term uncertainty around resetting yields as holdings roll.

Actual fund returns may differ due to fees, cash drag, intra-month reinvestment timing, liquidity buffers, and any non-government exposures the specific fund may hold.

This framework offers an evidence-based, succinct expectation of outcomes grounded in the most recent Singapore short-rate conditions and can be readily refreshed as new auctions occur.