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You Now Get Almost Nothing for Your Money, but It Could Be Worse

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Having enough cash on hand to pay the bills is always a good idea. But in an economic crisis like this one, with millions unemployed and thousands of businesses in trouble, it’s more desirable than ever.

Plenty of people don’t have a stash of cash. But for those fortunate enough to have salted away some extra money, a pressing question is: Where should you keep it?

The standard answer is somewhere safe, like a bank or a money market fund.

But don’t expect much in return. Now that the Federal Reserve has committed to keeping short-term interest rates near zero until at least 2022, you are likely to earn almost nothing on that money. And that’s if everything goes according to plan.

I’m not talking about a long-term investment; a diversified portfolio containing low-cost index funds that track broad markets would be my own preference for that. This is about a cash reserve for use over, say, the next three to six months, if life becomes cruel or you need to make a big payment for tuition or a car repair.

“Investors like to say ‘cash is king,’” said Peter G. Crane, the president of Crane Data of Westborough, Mass., which monitors money market funds. “In the coronavirus crisis, I’d say, cash is bigger than that; it’s the emperor of all things. If you ever doubted whether you needed some emergency savings, you probably believe it now.”

I spoke with Mr. Crane a decade ago, in the aftermath of the great financial crisis of 2007 to 2009, about the extraordinarily low yields on money market funds. Those rock-bottom, near-zero rates were expected to be temporary but they lasted for years. Now, he said: “We’re right back where we were then. The economy is in trouble, the Fed has responded and money market funds are paying almost nothing.”

What’s more, many fund companies are already waiving fees. If they didn’t, money market yields would be plunging below zero — in effect, into negative territory.

In that event, investors would be paying fund companies for the privilege of holding their money, an absurdity that major mutual funds generally want to avoid.

“That wouldn’t be attractive to investors, to say the least,” said Joseph K. Lynagh, who heads the cash management team at T. Rowe Price, a big asset management company based in Baltimore. Using the T. Rowe government money fund as an example, Mr. Lynagh walked me through the company’s thinking.

The fund’s current expenses, including administrative and management fees, add up to 0.42 percent of total assets, a figure that you can find on the company’s website. But when he said that on Thursday, the fund’s current gross yield — the income from its investments — was only 0.31 percent.

“You can infer from that, that without the fee waiver, the fund yield would be negative 0.11 percent,” he said. In other words, you would give T. Rowe Price $1 and one year later, you would have a small fraction of a cent less. That’s not terrible but it’s not a winning proposition.

And, he added, the gap between the T. Rowe fund’s income and its expenses is likely to widen the longer this economic crisis continues. That’s because money market fund managers must continually purchase new securities, and these will be paying lower rates than securities purchased before the downturn became acute.

But he expects that the company will swallow those deficits and won’t let its money market yields fall below zero, just as it didn’t during the long period of near-zero short-term rates from 2008 to 2015. The Fed says it intends to avoid negative rates if it can, and so will the money market funds.

After all, money market funds are a competitive $5.2 trillion business, Mr. Crane said. Deep-pocketed companies like T. Rowe Price, Vanguard, Fidelity, BlackRock and others are playing a long game. “Even if they are technically entitled to charge investors — or recoup waived fees later — they generally don’t want to do it,” he said. “It would hurt their reputation too much.”

That doesn’t mean that they wouldn’t do it.

In fact, as Daniel P. Wiener, an investment adviser and newsletter editor, told me, one outfit has put investors on notice that it intends to recoup waived fees down the road, as it did after the last financial crisis. That is TIAA, the company that runs the nonprofit CREF. These alphabet soup abbreviations reflect the history of the company: TIAA stands for Teachers Insurance and Annuity Association of America; CREF for College Retirement Equities Fund.

In a statement, TIAA said its CREF money market account is required by regulators to recoup losses, which it is now incurring. The fund does “not generate any profits to fund expense waivers” and must “recoup a portion of waived fees” down the road, it said.

Chad Peterson, a TIAA spokesman, said CREF provides retirement accounts for “people in higher education, the nonprofit community, teaching hospitals” and the like.

Given a choice — and countless mutual fund companies, as well as TIAA, offer other money market funds that don’t seek to recoup these fees — I’d avoid this fund.

Mr. Crane says he would stay away from funds with the very highest yields. “Higher yield probably means higher risk,” he said. At the moment, he said, a yield of just 0.50 percent “is already in nosebleed territory.”

For a safe place to keep your cash, he suggested that you consider government money market funds, which, as the name implies, hold government securities. They are “golden in a deep crisis,” like the one that required Federal Reserve intervention in March, as well as back in 2007-8, Mr. Crane said. “Prime funds,” which can hold commercial securities, may be less liquid when the going gets rough.

But prime funds are a reasonable choice, too. They have been quite safe compared with mutual funds that hold stocks or bonds and often lose large amounts of money. Even in the worst case of the last 20 years, in which one fund lost money for investors, the losses amounted in the end to only 1 cent on the dollar. “That’s not a lot to worry about,” Mr. Lynagh said.

For even greater security, consider a bank account with Federal Deposit Insurance Corporation backing, which guarantees up to $250,000. Accounts from old-fashioned banks with brick and mortar branches, as well as higher-yielding online-only enterprises, carry F.D.I.C. insurance, and their rates are tracked by the website Bankrate.com. In periods of extremely low market interest rates, like this one, some online bank accounts have higher rates than money market funds do, reversing the typical relationship. The banks’ advantage may not last, but as long as the accounts are fully insured, there’s little risk in exploiting it.

Safety is the main issue, when you’re looking for a place to keep your cash.

“Don’t worry so much about the return on your money,” Mr. Crane said. ”Worry about the return of your money.”

It’s not easy to amass a cash fund these days. If you’re lucky enough to have done it, be sure to read the fine print. That will help you avoid losses, including negative interest.

Source: https://www.nytimes.com/2020/06/12/business/emergency-fund-money-market.html

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The Briefing: RVShare raises over $100M, Google disputes charges, and more

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Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

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RVShare raises over $100M for RV rentals

RVShare, an online marketplace for RV rentals, reportedly raised over $100 million in a financing led by private equity firms KKR and Tritium Partners.

Akron, Ohio-based RVShare has seen sharp growth in demand amid the pandemic, as more would-be travelers seek socially distanced options for hitting the road. Founded in 2013, the company matches RV owners with prospective renters, filtering by location, price and vehicle types.

Previously, RVShare had raised $50 million in known funding, per Crunchbase data, from Tritium Partners. The company is one of several players in the RV rental space, and competes alongside Outdoorsy, a peer-to-peer RV marketplace that has raised $75 million in venture funding.

Funding news

  • BrightFarms closes on $100M: Indoor farming company BrightFarms said it secured more than $100 million in debt and new equity capital to support expansion plans. The Series E round of funding was led by Cox Enterprises, which now owns a majority stake in the company, and includes a follow-on investment from growth equity firm Catalyst Investors.
  • Anyscale inks $40MAnyscale, the Berkeley-based company behind the Ray open source project for building applications, announced $40 million in an oversubscribed Series B funding round. Existing investor NEA led the round and was joined by Andreessen Horowitz, Intel Capital and Foundation Capital. The new funding brings Anyscale’s total funding to more than $60 million.
  • Klar deposits $15M: Mexican fintech Klar closed on $15 million in Series A funding, led by Prosus Ventures, with participation from new investor International Finance Corporation and existing investors Quona Capital, Mouro Capital and Acrew. The round brings total funding raised to approximately $72 million since the company was founded in 2019. The funds are intended to grow Klar’s engineering capabilities in both its Berlin and Mexico hubs.
  • O(1) Labs rakes in $10.9M: O(1) Labs, the team behind the cryptocurrency Mina, announced $10.9 million in a strategic investment round. Co-leading the round are Bixin Ventures and Three Arrows Capital with participation from SNZ, HashKey Capital, Signum Capital, NGC Ventures, Fenbushi Capital and IOSG Ventures.
  • Blustream bags $3M: After-sale customer engagement company Blustream said it raised $3 million in seed funding for product usage data and digital transformation efforts for physical goods companies via the Blustream Product Experience Platform. York IE led the round of funding for the Worcester, Massachusetts-based company with additional support from existing investors.Pillar secures another $1.5M: Pillar, a startup that helps families protect and care for their loved ones, raised $1.5 million in a seed extension to close at $7 million, The round was led by Kleiner Perkins.

Other news

  • Google rejects DOJ antitrust arguments: In the wake of a widely anticipated U.S. Justice Department antitrust suit against Google, the search giant disputed the charges in a statement, maintaining that: “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”
  • Facebook said to test Nextdoor rival: Facebook is reportedly testing a service similar to popular neighborhood-focused social Nextdoor. Called Neighborhoods, the feature reportedly suggests local neighborhood groups to join on Facebook.

Illustration: Dom Guzman

Venture investors and leaders in the fintech space can visualize a future where such startups will move toward again rebundling services.

Root Inc., the parent company of Root Insurance, launched its initial public offering and is looking at a valuation of as much as $6.34 billion.

Clover Health posted rising revenues and a narrower loss in its most recent financial results, published in advance of a planned public market debut.

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

Source: https://news.crunchbase.com/news/briefing-10-21-20/

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Crunchbase

Syte Sees $30M Series C For Product Discovery

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Online shopping has become the norm for most people in 2020, even coaxing traditional retail brands to up their presence to stay competitive. However, now that shoppers can’t see and touch products like they used to, e-commerce discovery has become a crucial element for customer acquisition and retention.

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Enter Syte, an Israel-based company that touts creating the world’s first product discovery platform that utilizes the senses, such as visual, text and voice, and then leverages visual artificial intelligence and next-generation personalization to create individualized and memorable customer experiences, Syte co-founder and CEO Ofer Fryman told Crunchbase News.

To execute on this, the company raised $30 million in Series C funding and an additional $10 million in debt. Viola Ventures led the round and was joined by LG Technology Ventures, La Maison, MizMaa Ventures and Kreos Capital, as well as existing investors Magma, Naver Corporation, Commerce Ventures, Storm Ventures, Axess Ventures, Remagine Media Ventures and KDS Media Fund.

This brings the company’s total fundraising to $71 million since its inception in 2015. That includes a $21.5 million Series B, also led by Viola, in 2019, according to Crunchbase data.

Fryman intends for the new funding to be put to work on product enhancements and geographic expansion. Syte already has an established customer base in Europe, the Middle East and Africa, and will now focus expansion in the U.S. and Asia-Pacific.

Meanwhile, Syte has grown 22 percent quarter over quarter, as well as experienced a 38 percent expansion of its customer base since the beginning of 2020.

“Since we crossed $1 million annual recurring revenue, we have been tripling revenue while also becoming more efficient,” Fryman said. “We can accelerate growth as well as build an amazing technology and solution for a business that needs it right now. We plan to grow further, and even though our SaaS metrics are excellent right now, our goal is to improve them.”

Anshul Agarwal, managing director at LG Technology Ventures, said Syte was an attractive investment due in part to its unique technology.

“They have a deep-learning system and have created a new category, product discovery that will enable online shopping in a way we never had the ability to do before,” Agarwal said. “The product market fit was also unique. We believe in the strong execution by the team and the rapid growth in SaaS. We looked at many different companies, and the SaaS metrics that Syte showed are the strongest we’ve seen in a while.”

Illustration: Li-Anne Dias

Venture investors and leaders in the fintech space can visualize a future where such startups will move toward again rebundling services.

Root Inc., the parent company of Root Insurance, launched its initial public offering and is looking at a valuation of as much as $6.34 billion.

Clover Health posted rising revenues and a narrower loss in its most recent financial results, published in advance of a planned public market debut.

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

Source: https://news.crunchbase.com/news/syte-sees-30m-series-c-for-product-discovery/

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Coinpedia

GenTech Proudly Secures Deal with TruLife Distribution to Drive Growth in SINFIT Digital Sales

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Denver, CO, October 21, 2020 – OTC PR WIRE – GenTech Holdings, Inc. (OTC PINK: GTEH) (“GenTech” or the “Company”), an emerging leader in the high-end Premium Coffee (www.secretjavas.com), Hemp Wellness (www.hakunasupply.com) and Functional Foods (www.SINFITnutrition.com) marketplaces, along with its SINFIT Nutrition brand (“SINFIT”), is excited to announce that the Company has signed a new marketing, sales, and distribution agreement (the “Agreement”) with TruLife Distribution (“TruLife”) (TruLifeDist.com), a leader in marketing, distribution, compliance, e-commerce, and advisory services in the Functional Foods marketplace. The main focus of the new Agreement will be to accelerate the growth of e-commerce sales of SINFIT products, particularly over the Amazon.com platform.

TruLife provides direct access to sales on Amazon, Walmart, Rakuten, Wish, TopHatter, and other top e-commerce platforms, allowing clients to instantly list, ship, and sell products through any major platform, with an experienced team of experts and a proven track record of success in brand placement and digital sales strategies.

“We have already demonstrated a significant & expansive growth curve since taking control of the SINFIT brand in June,” commented Harold Vaca, VP Domestic Sales of SINFIT. “But the vast majority of that growth has been driven by large purchase orders from major distribution partners, both domestic and international. We are also committed to aggressively pursuing end-market consumer direct purchases through our e-commerce footprint, which will provide additional growth and diversify our cash flow ecosystem, making our overall strategy less dependent upon any one source of demand, while driving further growth in total sales.”

Management notes that e-commerce sales represent a sizeable portion of overall retail sales growth worldwide, with more than $3.5 trillion in online sales accounting for over 14% of total pre-pandemic global retail sales. Since the onset of the global health crisis, that ratio has shifted decisively further in favor of e-commerce sales, which is not likely to entirely revert back upon the advent of a viable and widely accessible vaccine.

Vaca added, “We have seen an epic process of market penetration for e-commerce platforms this year as major online retailers have begun to reach a much wider base of consumers – people who haven’t ever shopped much online, but have been forced to during recent months out of personal health concerns. Many of them will almost certainly continue to make use of e-commerce now that they have tried it out, at least to some extent, making e-commerce an essential sales channel for SINFIT products. TruLife has the network, team, experience, and resources to dramatically augment our e-commerce performance.”

SINFIT branded products registered over $2.2 million in global sales in 2019, and are now approved for sale and available for purchase on the Walmart.com and Amazon.com e-commerce platforms as well as in over 2,500 GNC locations in North America and over 10,000 global physical and e-commerce stores across more than 10 countries around the world.

SINFIT products as well-positioned relative to peers and to the long-term macro tailwind defining the functional foods market, which saw sales top $267 billion in February of this year on a global basis, with sales in the US reaching $63 billion, according to Euromonitor 2020. This trend is part of a larger supportive momentum in the general category, with global sales of organic food and drink topping $105 billion in 2018 (Ecovia 2019). U.S. organic food sales also reached $47.9 billion, up 5.9% in 2018 (OTA 2019). In 2019, 77% of U.S. adults used dietary supplements, an all-time high (CRN 2019). U.S. supplement sales are estimated to have reached $49.3 billion in 2019, up 6.2% (NBJ 2019).

About GenTech Holdings, Inc.:

GenTech Holdings, Inc. is a publicly traded company under the symbol GTEH. The Company launched a high-end Coffee Subscription service in early 2020 called Secret Javas, owns a Functional Food company, SINFIT Nutrition and recently closed its acquisition on Products-Groups’ “Hakuna Supply”.

Forward-Looking Statements
This press release may contain forward-looking statements, including information about management’s view of GenTech, Inc.’s future expectations, plans and prospects. In particular, when used in the preceding discussion, the words “believes,” “expects,” “intends,” “plans,” “anticipates,” or “may,” and similar conditional expressions are intended to identify forward-looking statements. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of GenTech, its subsidiaries and concepts to be materially different than those expressed or implied in such statements. Unknown or unpredictable factors also could have material adverse effects on GenTech’s future results. The forward-looking statements included in this press release are made only as of the date hereof. GenTech cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, GenTech undertakes no obligation to update these statements after the date of this release, except as required by law, and also takes no obligation to update or correct information prepared by third parties that are not paid for by GenTech.

Corporate Contact:
invest@gentech.group

www.gentechholdings.com

Source: https://otcprwire.com/gentech-proudly-secures-deal-with-trulife-distribution-to-drive-growth-in-sinfit-digital-sales/

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