The 4.5-5% yields we quote are net of expense ratio. Then our cut is 0.25%, comparable to the 0.15% to 0.6% charged by Mercury, Rho, etc. And we're working on bringing that expense ratio down as we scale.
Functionally speaking, short-duration floating-rate agency MBS trade at such a stable NAV that they're perfectly sufficient for long-term cash, and many large companies trade these.
MBSF is complex in the way that basically any fund is complex, but the strategy it employs is actually quite simple since it only trades a single asset class. Yes the expense ratio is higher than some other funds but the additional yields more than make up for it.
ICSH and SGOV are great funds too, and make sense for shorter-term cash, but they pay significantly less than we do.
Broadly speaking, our product is meant for exactly the kind of cash strategy you're thinking about: multiple buckets with duration spread accordingly. At the moment, our platform is just for the long-term bucket. But in the future, we might add additional shorter-term buckets too (maybe even with ICSH or SGOV).
The risk you are hiding will eventually show up. Charging .25% ER means you probably can make some decent money in the meantime and since the customer holds MBSF directly, you aren't on the hook for the risk. Smart.
It's a great business for you, if you can get enough customers. That said, I would never ever recommend anyone invest with you, since you are either purposely withholding the risks or not smart enough about the product you are trying to sell to understand the risks involved and share them with your customers. Either way, people shouldn't use your service.
Functionally speaking, short-duration floating-rate agency MBS trade at such a stable NAV that they're perfectly sufficient for long-term cash, and many large companies trade these.
MBSF is complex in the way that basically any fund is complex, but the strategy it employs is actually quite simple since it only trades a single asset class. Yes the expense ratio is higher than some other funds but the additional yields more than make up for it.
ICSH and SGOV are great funds too, and make sense for shorter-term cash, but they pay significantly less than we do.
Broadly speaking, our product is meant for exactly the kind of cash strategy you're thinking about: multiple buckets with duration spread accordingly. At the moment, our platform is just for the long-term bucket. But in the future, we might add additional shorter-term buckets too (maybe even with ICSH or SGOV).