For this and other short-term purposes, money alternative ETFs may be useful. They are considered protected (although not covered by deposit insurance) and yet liquid. Unlike a Guaranteed Investment Certificate (GIC), you possibly can sell them at any time – but they may still offer you GIC-like returns and retain their value if rates of interest rise.
Our top picks for money alternative ETFs
Of the dozen or so options in Canada, our panel liked the Global X 0-3 Month T-Bill ETF (CBIL) the perfect. Panelist Mark McGrath called it “the safest Canadian dollar cash alternative available.” It invests in Canadian federal treasury bonds with a maturity of lower than three months, so there isn’t a maturity risk.
“A low MER of 0.11% for a fairly stable NAV with minimal credit and interest rate risk, and it pays monthly income that fluctuates in lockstep with the Bank of Canada’s key interest rate,” Tony Dong added.
The panel also favored the BMO Money Market Fund ETF, which has barely more scope to speculate in short-term government and company securities and subsequently generates a rather higher return. Third place in our voting went to the Global X High Interest Savings ETF, which holds a portfolio of just five investors high-interest savings accounts with various Canadian financial institutions.
Get free MoneyDown financial suggestions, news and advice in your inbox.
Read more about investing:
