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When to sell CASH.TO?
June 27, 2024
11:15 am
Max
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I need money to pay for company income taxes by the 30th of June but will receive a paycheck on the 9th of July.

If I sell cash.to etf on the 27th of June and had it invested since the 1st of June, do I lose the interest for all the month or just the last 4 days?

The day you become free is the day you work for fun.

June 27, 2024
1:21 pm
Dennis
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Max said
I need money to pay for company income taxes by the 30th of June but will receive a paycheck on the 9th of July.

If I sell cash.to etf on the 27th of June and had it invested since the 1st of June, do I lose the interest for all the month or just the last 4 days?  

It is too late already but anyway short answer is only 4 days. Unlike mutual funds, it trades in market with any price but it trades very closely (mostly less than 1cent) to the NAV and accrued interest is reflected in NAV everyday.

June 27, 2024
3:14 pm
TINAisOver
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Hi Max, Cash.to is like any other ETF. It pays out a dividend monthly. This dividend is made up of interest earned by the fund and paid out to share holders on record of the ex-dividend date issued by the fund management company, now known as Global X Investments Canada.
Today is actually its pre ex-dividend date, the last day the ETF accumulates value before resetting and starting the process over again tomorrow, June 28th.
Tomorrow's value I expect to be today's closing price ($50.17) minus dividend per share ( 0.19 cents) = opening value 49.98.

So if you were to sell it today you would receive the accumulated gain of CASH.TO since purchasing on June 1. If you did sell your stock you would not receive the dividend since you are no longer on record of holding those shares on June 28th. It's one or the other , not both. The person or entity that purchased your shares would be the record holder and thus they would receive the dividend.

I hope that was helpful.

Trader first, Saver second

June 27, 2024
9:45 pm
Norman1
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Max said

If I sell cash.to etf on the 27th of June and had it invested since the 1st of June, do I lose the interest for all the month or just the last 4 days?

According to the TMX Money quote page for CASH, the ex-dividend date for the July 8 distribution of 19¢ is June 28.

If one sells on June 27, then the sale is cum-dividend, includes the right to the July 8 distribution. Consequently, seller will not receive any of 19¢ distribution from the ETF.

The hope is that the buyer will pay a higher price to share some of the 19¢ the buyer will receive on July 8. Just like a home buyer will pay a bit more when the home seller has paid the property taxes for the year to the city and the sale closes later the same year.

June 29, 2024
12:54 pm
RetirEd
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I guess it's too late now, but couldn't CRA agree to a few days later as a payment agreement, avoiding the late-filing penalty and only paying a few days' interest? Or might the person paying your paycheque help out?

RetirEd

June 30, 2024
7:52 am
AltaRed
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These Cash ETFS daily market price reflect the accrued interest throughout the month until ex-distribution date with the accrued interest being a capital gain if ETF units are sold at FMV greater than $50.

Go to https://money.tmx.com/en/quote/CASH and select 3 months to see how that works. Nothing is lost if sold before the ex-distribution date. One gets accrued interest as cap gains.

June 30, 2024
11:17 am
Norman1
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That's not the case all the time.

Interest accrues daily. Yet, the trading prices of CASH June 11, 12, and 13 didn't increase those three days:

Tue, Jun 11, 2024 Closing: 50.08 Open: 50.07 High: 50.08 Low: 50.07
Wed, Jun 12, 2024 Closing: 50.075 Open: 50.07 High: 50.08 Low: 50.07
Thu, Jun 13, 2024 Closing: 50.08 Open: 50.08 High: 50.09 Low: 50.08

If there's more supply than demand, then the motivated sellers will give up some interest.

June 30, 2024
12:21 pm
AltaRed
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Agreed for the reasons you say but the trend is still clear from the chart I linked.

One should not be buying Cash ETFs if one is counting on their accrued interest each day. Own an ISA or a MMF instead where daily accrued interest is a 'certainty'.

July 2, 2024
12:01 pm
TINAisOver
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AltaRed said
Agreed for the reasons you say but the trend is still clear from the chart I linked.

One should not be buying Cash ETFs if one is counting on their accrued interest each day. Own an ISA or a MMF instead where daily accrued interest is a 'certainty'.  

Although there is accrued interest certainty in a MMF the ability to sell at anytime may not be worth it. This one is better to wait to maturity

From post #4
"The hope is that the buyer will pay a higher price to share some of the 19¢ the buyer will receive on July 8. Just like a home buyer will pay a bit more when the home seller has paid the property taxes for the year to the city and the sale closes later the same year."

Most often the last day prior to ex-dividend date the MMF/HISA ETF's sells for less than the total accumulated value of the dividend plus base price of the ETF. EX. If CASH.TO is $50.00 on ex-dividend date and the next dividend pay out is .205 the selling price on the last day of the cycle will be between 50.18 -50.20 . At the very least the seller would need to give up .5 cents. This usually is the scenario but exceeding the pay out is not uncommon.
This occurs because the seller has a greater incentive to sell than the buyer has to acquirer. Sellers are selling mostly to avoid a dividend that is classified as income revenue. Buyers are motivated to acquire if the ETF price is below dividend plus the prior ex div. ETF value. This is like getting a discount.
On Ex-dividend day the reverse is true.

Interesting Note today. Unusual action today on ZMMK. Very unusual. ZMMK closed on Friday at $49.89 and opened 49.92 and for the first few minutes the bid and ask was 49.93 , 49.94. That is FMV for today. Suddenly the price shot up to 49.98, 49.99. 9-10 cents above Friday's close. I quickly as I could sold the majority of my ZMMK position. I've seen this before and actually hunt for these opportunities. These anomalies usually lasts seconds , at most minutes. This time it was hours. My original plan was to buy back at FMV today. I checked other MMF / HISA ETFs , they were trading as expected. I thought maybe I'm missing something. I decided not to wait. Using the funds from the sale ZMMK today I bought CASH.TO @ 50.01.
Last checked at 2pm ZMMK is now trading almost back to normal. 49.93,49.96.
'

Trader first, Saver second

July 2, 2024
1:48 pm
AltaRed
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Yes, there is always opportunity on something like CASH.TO but I don't know of many (any in real life) folk who would spend their time hovering over their monitor to potentially capture 2-4 cents cap gains around ex-dividend date. For those that do, and have zero trading commissions, and don't have a better way to spend their time, kudos to them. I think for most of us, these vehicles are only places to get yield on cash equivalent emergency/trading funds.

I generally stick with ISAs like BMT104 and DYN6004, albeit I did swap out BMT104 for BMO95142 mid-June after BMO dropped BMT104 yield by 25bp, at least for now while money market funds with duration of 30-90 days lag the ISAs in downward trends in yields. The delta will approach zero in another 30 days or so, unless there is another BoC interest rate drop on the 25th of this month.

Added: From https://bmofundcentral.com/fund/68033978/#under-the-hood BMO95142 Current Yield as of June 28th has already dropped to 4.79% from about 4.95% a month ago.

CASH.TO gross yield as of June 20 was 4.68% with net yield of 4.57%, albeit in cap gains format if traded just before ex-dividend date. I think one would have to be playing with >$500k to make this a worthwhile effort.

July 6, 2024
2:43 pm
Fritz23
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Is BMO95142 an ISA or a MMF with monthly dividends? How and where could I buy BMO95142?

Thanks,

July 6, 2024
5:16 pm
AltaRed
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Fritz23 said
Is BMO95142 an ISA or a MMF with monthly dividends? How and where could I buy BMO95142?

Thanks,  

It is a MMF with monthly distributions, usually re-invested back into more units. You will have to check whether your brokeage lists it for purchase. Obviously a mutual fund sales person can sell it to you at BMO branches but otherwise it would be through a brokerage account.

July 6, 2024
7:09 pm
MG
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Fritz23 said
Is BMO95142 an ISA or a MMF with monthly dividends? How and where could I buy BMO95142?

Thanks,  

I have purchased it through my brokerage account CIBC Investor's Edge.

July 6, 2024
8:01 pm
Norman1
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BMO95142 is accepted, at least, by Scotia iTRADE's mutual fund order page.

BMO95142 is the series F units of the BMO Money Market Fund, with 0.13% MER and 4.84% current yield. Not likely it would be available through the mutual fund sellers in a BMO branch; there isn't room in the MER for a trailer commission.

Instead, BMO142, the series A units of the same fund, would be offered in a BMO branch with a higher 0.75% MER and lower 4.25% current yield.

July 7, 2024
11:32 am
Fritz23
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Thank you. Does this means this is an accumulating Fund like ZST.L?

July 7, 2024
11:47 am
Norman1
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Money market mutual funds, like BMO142 and BMO95142, are handled through mutual fund bookkeeping systems that can handle fractional units.

Additional units, whole and fractional, are issued for reinvested distributions. There is no reverse split of the units afterwards to keep the number of units the same; there is no need to avoid fractional units as there would be with exchange traded fund units like ZST.L.

July 7, 2024
11:54 am
Fritz23
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Thanks, Norman1. In this regard BMO142 and BMO95142 or working like ISAs?

July 7, 2024
12:51 pm
AltaRed
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Fritz23 said
Thanks, Norman1. In this regard BMO142 and BMO95142 or working like ISAs?  

To the retail customer, they are more similar than dissimilar in that both are bought and sold through the mutual fund system and both accrue interest daily and pay monthly, generally via re-investment into more units than cash as selected by the ISA/MMF holder. Most are priced at $10/unit but many are priced at $1/unit (anecdotally BMO and BNS seem to do more of the latter).

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