AFR- June 27, 1997 Banks’ cash management accounts report steady flows, but the real beneficiaries of the impasse are cash management trusts. The question is, which kind of vehicle would suit you?
Andrew Willink says, cash management trusts (CMTs) make sense when investors have less than $100,000 (see table referring to the likelihood of getting better than a 4.75 per cent return.)
Over $100,000, the cash management accounts (CMAs) run by banks become worthwhile, because the banks offer tiered rates depending on the sum of money invested instead of the flat rates offered by the funds.
Willink’s calculations are based on interest rates after management fees are taken out, but do not include State and Federal taxes (FID and debits tax) incurred by both vehicles.