A cash management trust is an investment vehicle that provides returns for investors by buying into short-term liquid assets such as interest bearing securities and bank bills. The concept was first introduced in Australia in 1980 by the Macquarie Bank and became a popular means of investing due to the soaring interest rates.

Previous to this it was only those investors who had hundreds of thousand of dollars to invest who could use a cash management trust for investing. Nowadays cash management trusts are available to investors with just a few thousand dollars as their money is pooled with many others - as it is with other kinds of managed investments.

The cash management trust is suited to investors who prefer low risk, liquidity and capital security. There are attractive returns and the investors have ready access to their funds and a regular savings plan.

Management fees and costs incurred by the investors are expressed as a percentage of the fund’s net asset value, but this does not include brokerage costs. As with all other investments, those wishing to take advantage of a cash management trust should research carefully to make sure it is suited to their needs.