High Interest Cash ETFs (< 4.96%) [CAD/USD] [CDIC: NO!] + Money Market ETFs
These look like great tools for those with idle capital in a brokerage account, but which to choose?
What are these? These are funds run by private corporations that take your money and stuff it into the same banks we use, but their accounts receive much higher interest. They receive these higher rates by having bulk/volume negotiated discounts with the depository banks. In doing so, they will take a small fee from us (not exceeding 0.18%/year) but we get access to that sweet corporate interest rate.
Money market ETFs: they take your money and place it in bank deposits and relatively safe government/corporate bonds. There is no CDIC coverage as the D in CDIC means deposit, these include other fixed income products (bonds). These are not yet banned by any of the banks, even if you buy one from a competitor. They will take a hefty MER. No tax-dodging.
How do I get them? You will need a discount brokerage account so - Desjardins' Disnat, National Bank Direct Brokerage, Questrade, Wealthsimple, Scotia iTrade, CIBC Investor's Edge, TD Direct Investing, RBC Direct Investing, BMO Investor Line, etc. You would buy these like you would any other ETF or stock, during the business day.
For this operation, I'd recommend Disnat, NBDB, or Wealthsimple as they can be set up to not charge commissions. I have WS but will open Disnat and NBDB soon for their no-commission policy - but I will be leaving more than 15k/20k in each of Disnat/NBDB to avoid their fees if you're over 30 (under 30 free, and NBDB will exempt members of professional associations from fees). Wealthsimple will not have fees (if you stay in CAD) and is a great starter brokerage.
Decent yield with low MER. But they're not CDIC covered...but some will use Charter 1 banks, others just specified Chartered banks.
If this is a problem, you should check out the Big 6 bank Investment Savings Account (ISA) offerings (they don't have tax-dodging instruments, and rates are lower): https://forums.redflagdeals.com/big-6-h ... s-2579841/
The Big 6 bank brokerages can buy their own ISAs for no fee. However, as far as I know, Scotia iTrade is the only one that allows F-series access to the public (advisor series with no trailer fees and higher yields).
Additional Documentation:
PWL Capital: High Interest Savings Account ETFs
https://web.archive.org/web/20230102145 ... ount-etfs/
How does Horizons dodge taxes?
Swap ETF Evolution To Corporate Class (Part 2: Rise of the Resistance)
https://www.looniedoctor.ca/2019/12/13/ ... -analysis/
Source: https://www.bnnbloomberg.ca/try-high-in ... -1.1773866
If anything, these should encourage people to open a discount brokerage account. Everyone should have at least one.
NO CDIC: Purpose investments lists this in their info page (honest/transparent about it): https://documents.purposeinvest.com/Doc ... -11-24.pdf
NO GUARANTEES
ETFs do not have any guarantees. You may not get back the amount of money you invest. Although the fund primarily invests in bank deposit accounts, the fund is not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer.
New Concept: Money Market ETFs
On Jan 17 2023, user @tsuda had introduced the concept of money market ETFs. These are different in structure to those above I'd imagine. There is also no CDIC protection. But these can be used to bypass BMO/RBC/TD's "Competitor Deterrence Field". BMO runs ZMMK-T, and iShares runs CMR-T. Details in thread summary below. Third party documentation for now, source documents in the thread summary below:
https://wealthawesome.com/money-market-etfs-canada/
[moved to Thread Summary Section for crowd-sourced updating]
Ignore the signature recursion.
What are these? These are funds run by private corporations that take your money and stuff it into the same banks we use, but their accounts receive much higher interest. They receive these higher rates by having bulk/volume negotiated discounts with the depository banks. In doing so, they will take a small fee from us (not exceeding 0.18%/year) but we get access to that sweet corporate interest rate.
Money market ETFs: they take your money and place it in bank deposits and relatively safe government/corporate bonds. There is no CDIC coverage as the D in CDIC means deposit, these include other fixed income products (bonds). These are not yet banned by any of the banks, even if you buy one from a competitor. They will take a hefty MER. No tax-dodging.
How do I get them? You will need a discount brokerage account so - Desjardins' Disnat, National Bank Direct Brokerage, Questrade, Wealthsimple, Scotia iTrade, CIBC Investor's Edge, TD Direct Investing, RBC Direct Investing, BMO Investor Line, etc. You would buy these like you would any other ETF or stock, during the business day.
For this operation, I'd recommend Disnat, NBDB, or Wealthsimple as they can be set up to not charge commissions. I have WS but will open Disnat and NBDB soon for their no-commission policy - but I will be leaving more than 15k/20k in each of Disnat/NBDB to avoid their fees if you're over 30 (under 30 free, and NBDB will exempt members of professional associations from fees). Wealthsimple will not have fees (if you stay in CAD) and is a great starter brokerage.
Decent yield with low MER. But they're not CDIC covered...but some will use Charter 1 banks, others just specified Chartered banks.
If this is a problem, you should check out the Big 6 bank Investment Savings Account (ISA) offerings (they don't have tax-dodging instruments, and rates are lower): https://forums.redflagdeals.com/big-6-h ... s-2579841/
The Big 6 bank brokerages can buy their own ISAs for no fee. However, as far as I know, Scotia iTrade is the only one that allows F-series access to the public (advisor series with no trailer fees and higher yields).
Additional Documentation:
PWL Capital: High Interest Savings Account ETFs
https://web.archive.org/web/20230102145 ... ount-etfs/
How does Horizons dodge taxes?
Swap ETF Evolution To Corporate Class (Part 2: Rise of the Resistance)
https://www.looniedoctor.ca/2019/12/13/ ... -analysis/
Source: https://www.bnnbloomberg.ca/try-high-in ... -1.1773866
If anything, these should encourage people to open a discount brokerage account. Everyone should have at least one.
NO CDIC: Purpose investments lists this in their info page (honest/transparent about it): https://documents.purposeinvest.com/Doc ... -11-24.pdf
NO GUARANTEES
ETFs do not have any guarantees. You may not get back the amount of money you invest. Although the fund primarily invests in bank deposit accounts, the fund is not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer.
New Concept: Money Market ETFs
On Jan 17 2023, user @tsuda had introduced the concept of money market ETFs. These are different in structure to those above I'd imagine. There is also no CDIC protection. But these can be used to bypass BMO/RBC/TD's "Competitor Deterrence Field". BMO runs ZMMK-T, and iShares runs CMR-T. Details in thread summary below. Third party documentation for now, source documents in the thread summary below:
https://wealthawesome.com/money-market-etfs-canada/
[moved to Thread Summary Section for crowd-sourced updating]
Ignore the signature recursion.
Last edited by ADenariusSaved on Mar 8th, 2023 10:24 pm, edited 44 times in total.
Bank ISAs, CDIC! <= 4.50%: https://forums.redflagdeals.com/bank-in ... sd-2579841
HISA ETFs, NO CDIC! <= 4.96%: https://forums.redflagdeals.com/high-in ... s-2574002/
HISA ETFs, NO CDIC! <= 4.96%: https://forums.redflagdeals.com/high-in ... s-2574002/
I'm currently using 4 platforms myself and banking both south and north of the border (who knows how many accounts at this point as well, lol).