Adelaide Bank has become the latest financial institution to launch a cash management account (CMA) with the functionality of a cash management trust (CMT), to give customers more efficient access to the Federal Government's deposit guarantee.
"The Adelaide CMA offers investors the same return and functionality as the existing Adelaide Cash Management Trust, along with access to the Federal Government guarantee for customers' aggregate deposits of up to $1 million," Adelaide Bank general manager of managed funds Bruce Spiers said.
The new CMA allows customers to leverage 100 per cent of their cash deposit balance into a margin loan facility.
The bank's margin lending subsidiary, Leveraged Equities, offers margin loans with a maximum 100 per cent loan-to-value ratio on any of the institution's cash products.
The feature was included in the new CMA to give clients the advantage of having a cash asset as the security for the margin loan to satisfy potential margin calls, without being pressured into a forced asset selling situation.
"Financial planners are looking for ways to give their clients peace of mind when it comes to cash deposits, but that many may also feel there are opportunities to be found in equity markets," Spiers said.
"We have developed this product to give investors the flexibility to leverage into equity markets, without sacrificing the assurance of the government guarantee on their cash holdings."
For existing CMT customers wanting to switch their cash holdings to the new CMA, Adelaide Bank aims to make the process as smooth as possible.
"All existing CMT account details and functionality, direct debits and credits, cheque books, cash cards and PINs will be retained," Spiers said.
The new CMA will be available to new customers from December 1, 2008.
