With inflation remaining persistent, we believe clients deserve a solution that helps their money work harder – delivering growth even over shorter time horizons without requiring excessive risk.
Traditional savings solutions may no longer offer the same level of protection or return in real terms. At the same time, moving too far up the risk spectrum is not always appropriate, especially for short-term goals.
This is exactly the gap that Enhanced Yield is designed to address.
A different approach to short-term investing
Enhanced Yield is a discretionary portfolio designed as an alternative to traditional savings accounts. Its objective is simple to deliver returns above cash, while keeping risk at a controlled level.
Specifically, the strategy targets returns 1% above the Bank of England base rate, which currently translates to a gross annualised target return of 5.02%*, based on the weighted average of the gross returns regularly published by the underlying instruments.
Rather than relying on static allocations, the portfolio is managed through an optimiser that dynamically selects the most efficient mix of assets to pursue this objective while minimising risk.
This makes Enhanced Yield particularly suited for
- short-term investment horizons (1–3 years)
- investors looking to reduce exposure to market volatility
- those seeking an alternative to cash without sacrificing growth potential
Why consider Enhanced Yield?
By choosing Enhanced Yield, you can benefit from
Consistent and stable returns – Targeting a steady return of 1% above the Bank of England base rate, currently 5.02% (gross of Moneyfarm fees).
Low risk – Built to reduce volatility and maximum drawdowns relative to comparable fixed income strategies.
Active management and continuous monitoring – Systematically managed through an optimiser designed to maintain the most efficient allocation over time.
Low and transparent costs – 0.3% all-in annual Moneyfarm fee plus an average underlying instrument costs of 0.27%.
No lock-ins – Designed for a 1-3 year horizon, but with no minimum holding period. You can invest and withdraw at any time, with settlement generally within three business days. The advertised rate applies to all clients – not just new customers or those benefiting from temporary ‘boost’ offers.
This is not a deposit account nor a pure money market fund, and invested capital is subject to risk. Unlike a bank account, returns vary over time depending on different factors and are sensitive to changes in interest rates a decline in rates may result in a reduction in expected returns. The current return is gross of Moneyfarm fees and net of TER of the underlying instruments.
How the strategy works
The objective of Enhanced Yield is to preserve capital and generate returns aligned with short-term interest rate trends, aiming for higher outcomes compared to traditional cash holdings.
The solution may invest mainly through institutional funds or Exchange Traded Funds (ETFs), across money market instruments, short-term government bonds, corporate bonds, and selected exposures (like high yield bonds) to broaden diversification while seeking better potential return opportunities at the same time.
This approach aims to capture potentially higher returns than a traditional money market fund, while maintaining a limited risk profile.
Understanding the risk
Below, we review the historical performance of the Enhanced Yield strategy and how it has behaved across different market environments – including more challenging periods such as 2020 and 2022*. We also compare it with cash and other bond investments.
| Enhanced Yield | Cash* | Short term Investment Grade* | |
| Return since 30 Jan 2018 | 3.07% | 2.07% | 2.25% |
| Return last 3 years | 5.07% | 4.6% | 5.6% |
| Expected Return** | 5.02% | 3.85% | 5.2% |
| Volatility*** | 0.86% | 0.1% | 3.62% |
| Max DD*** | -4% | 0% | -12.25% |
Cash product proxied by Xtrackers II GBP Overnight Rate Swap
Short Investment Grade proxied by using history for Sterling Corp Bond 0-5yrs Index
** Current indicative Yield to Maturity of portfolios with that given mandate
*** Backtested. “Max DD” means Maximum Drawdown the biggest drop in the investment value.
Over the period shown, Enhanced Yield delivered stronger cumulative returns than short-term bonds, with lower volatility and more limited drawdowns. Compared to cash, it involves some market risk – for example, during the bond market stress of 2022, it experienced a maximum drawdown of 4%.
*Please note that this portfolio didn’t exist over this period, this is a simulation of the strategy over the period. This can be affected by institutional funds or ETFs availability and starting point taken for the start of the simulation. This also doesn’t factor in any liquidity risk that may arise in future bond market downturns – although it factors in the risk that was present in 2022 and 2020.
Capital is at risk. The value of the investment may fall as well as rise and you may receive back less than you invested. Return projections are not a reliable indicator of future performance. It is important to consider your risk tolerance and investment objectives before proceeding.
*As with all investing, financial instruments involve inherent risks, including loss of capital, market fluctuations and liquidity risk. Past performance is no guarantee of future results. It is important to consider your risk tolerance and investment objectives before proceeding.
