Where do you park your CAD$? | General comparisons | Discussion forum

Max said
In my brokerage account I had some available funds waiting to be invested, parked it by buying CASH.TO for the moment. Planning to buy some SPY in the future.

What do you do with your available funds?  

cash etf, brokerage cash etfs, etc

you are already optimizing ur cash earned at the moment while waiting for stock market correction.

canadian.100 said

So the DJIA is down today 236 points ie 0.61%
and the TSE is down 196 points ie 0.93%
Not sure how many points you will consider a stock market correction - as we all know one should not "time the market" whether it be stocks or GICs.  

What you mentioned is just normal market fluctuation, its noise and nothing else.
If you ask me, I am not putting new money into the stock market at current level. Its whatever one's investment style and risk taking capability that dictates when and how much to invest. "Should not time the market" is a very useless 'useful saying', that seem to make a lot of sense, when it really isnt. There are only 2 time-tested rules for successful invesment in my mind:
1) Buy when it looks like the end is coming and even the diamond hands are getting shaky
2) If the ground goes from rock solid to appear to be shaky, be the first one to sell if one wants to sell, dont wait and be the last (This ties in with point#1 btw)

Suggest OP look at the ISAs at his brokerage , under "mutual funds".

I agree with savemoresaveoften.
.

Max said
Do you have any preferences in the different ETF options?

NSAV.NE: Ninepoint High Interest Savings Fund
PSA.TO: Purpose High Interest Savings Fund
HSAV.TO: Horizons Cash Maximizer ETF
CASH.TO: Horizons High Interest Savings ETF
CSAV.TO: CI High Interest Savings ETF
HISA.NE: High Interest Savings Account Fund  

While I prefer ISAs, some discount brokerages do not offer ISAs, or have a very limited selection of ISAs.

Are you with Wealthsimple, Max? If so, you can use their built-in Wealthsimple Cash account, which includes a linked prepaid credit card, that pays between 4-5% per annum, currently, and is CDIC insured as the funds are custodied with Canadian Western Trust Company and held in either a Canadian Western Trust or Canadian Western Bank deposit account.

If either of those are not options, the HISA ETF I would tend to prefer is HISA (which I guess is HISA.NE, assuming .NE means NEO Exchange). It's a product from Evolve ETFs and currently has ~$5 billion in assets under management.

https://evolveetfs.com/product/hisa/

Of course, only the first $100,000 of that ~$5 billion would be CDIC insured. CIBC Mellon Trust Company is the custodian and trustee of the assets; CIBC Mellon Global Security Services Company is the fund administrator; and TSX Trust Company is the fund registrar and transfer agent, which maintains the daily record of the fund's unitholders and units held by each. In short, your funds would be in good hands there.

A word on sales: some people try and 'time' when to sell the fund, taking in the expected premium to NAV relative to the expected next monthly interest payment. That's not guaranteed and is really time consuming. For me, if I held these HISA ETFs, I would just treat it for what it is, interest is calculated daily but only paid monthly, so just know that to receive that month's interest payment, I should sell on the next business day following the monthly payment date.

Cheers,
Doug

Paid out or reinvested, interest income is taxed.

zgic said
I am trying to understand what are the benefits of holding these HISA ETFs than plain GICs?
I am new to this and wanted to understand why one should buy these HISA ETFs

Thanks  

Liquidity They are almost as good as cash. Available T+1 (2 days). Just like brokerage ISAs and MMFs. However, yield is not guaranteed, All of these will drop in yield as soon as BoC drops interest rates.

Trusts such as ETFs and MMFs do not have CDIC coverage but generally hold investment grade assets essentially negating the need for deposit insurance. Brokerage ISAs are deposit accounts and have CDIC coverage to $100k.

The difference between them and HISA bank/CU accounts is yield. The former tend to follow BoC interest rates and thus are currently outperforming HISAs, but will no doubt underperform HISA accounts when/if BoC significantly drop interest rates.

HISAs compete in a somewhat different (retail banking customers primarily) market for the most part. Interest rates are set to attract the deposits they need, or do not need, as the case may be with their banking competition. Yield differences can be significant so it depends on what a retail investor is prepared to do to obtain a particular yield.

mordko said

You should really be comparing to a high interest savings account rather than GIC to make sure its apples to apples.

In your case, if you can find a standard HISA account which pays a comparable or better rate, HISA ETFs may have no advantages at all. But lets say its cash held in a corporate account. Corporate savings accounts pay… Lets say 2.5% interest. That makes HISA a lot more attractive. There are other circumstances when HISA ETFs become attractive; its case by case.  

Thanks mordko.
The HISA account is covered by CDIC like Tangerine and currently it is paying me 6% till Feb end.
But the HISA ETF CASH is NOT covered by CDIC correct? So is the risk high on this without the CDIC coverage?
Also current 12-month trailing yield is 5.08% minus MER 0.11% so Net Yield = 4.97%

zgic said

Thanks mordko.
The HISA account is covered by CDIC like Tangerine and currently it is paying me 6% till Feb end.
But the HISA ETF CASH is NOT covered by CDIC correct? So is the risk high on this without the CDIC coverage?
Also current 12-month trailing yield is 5.08% minus MER 0.11% so Net Yield = 4.97%  

The first $100,000 of a HISA ETF's AUM is CDIC insured, but that's yet. Correct.

Yes, as AltaRed corrected me in another post, the MER, though paid annually, is deducted monthly, out of fairness to all unitholders (short- and long-term). So your yield calculation sounds accurate.

The risk is not necessarily high, though. What is the likelihood the underlying asset, a Canadian Big Six bank, becomes insolvent?

That being said, an investment manager can always propose to change the investment mandate of a HISA ETF to hold other assets, but such a change requires unitholder approval, so you would have at least two to three months notice of such a proposed change. They're doing that a bit now, but mainly just to add investment grade Government of Canada treasury bills and certain money market instruments, like the Ontario Teachers Finance Trust commercial paper, things like that.

Cheers,
Doug

Doug said

The first $100,000 of a HISA ETF's AUM is CDIC insured, but that's yet. Correct.

Cheers,
Doug  

Thanks Doug.
Sorry, little confused, are you saying that the HISA ETFs are covered by CDIC for 100,000 in your statement above?
Looking for that here
https://horizonsetfs.com/ETF/hsav/#product-facts