Money market ETFs invest in highly liquid instruments like hybrid-interest savings accounts (i.e. cash), term deposits, short-term debt securities, cash equivalents, and other low-risk, short-term investments.
Also referred to as Cash ETFs or high-interest savings account (HISA) ETFs, these ETFs come in handy when you want access to income and need to preserve capital.
This guide covers the best money market ETFs in Canada, their pros, cons, fees, and whether you should consider them for your portfolio.
What is a Money Market ETF?
A money market ETF is a type of Exchange-Traded Fund that is invested in cash and cash-equivalent securities, as well as short-term debts such as U.S. Treasury bills.
These ETFs are designed to provide capital preservation and some appreciation while exposing investors to minimal risk.
Because they are safe investments, Money Market ETFs and funds may not keep up with high inflation rates like we have right now.
A money market ETF that invests in high-interest deposit accounts at Canadian banks is called a HISA ETF.
Best Money Market ETFs in Canada
Canadians have a thin list of Cash and HISA ETFs to choose from. The ones currently available are as follows:
- Evolve High Interest Savings Account Fund (HISA)
- Horizons High Interest Savings ETF (CASH)
- CI High Interest Savings ETF (CSAV)
- Horizons Cash Maximizer ETF (HSAV)
- Purpose High interest Savings ETF (PSA)
- iShares Premium Money Market ETF (CMR)
- Ninepoint High Interest Savings Fund (NSAV)
Fund facts are as of November 2022.
1. Evolve High Interest Savings Account
- Ticker: HISA
- MER: 0.15%
- Assets under management (AUM): $2.46 billion
- Yield: 4.24% (Gross)
- Inception: November 20, 2019
If you are seeking exposure to high-interest deposit accounts and monthly cash flows, the Evolve High Interest Savings Account Fund may be for you. It is 100% invested in cash and has a “low” risk rating.
HISA has a monthly distribution frequency, and its yield has increased in 2022 as the savings rates offered by banks have increased.
This fund is listed on the NEO Exchange.
2. Horizons High Interest Savings ETF
- Ticker: CASH
- MER: 0.13%
- AUM: $936 million
- Yield: 4.29% (Gross)
- Inception: November 1, 2021
Like the Evolve HISA ETF, this Cash ETF from Horizons is 100% invested in high interest savings vehicles in Schedule 1 Canadian charted banks.
You can buy and sell it on discount brokerage trading services that offer it in Canada.
CASH is also expected to make monthly distributions to unitholders.
You can hold the ETF in registered and non-registered investment accounts. It is listed on the TSX.
3. CI High Interest Savings ETF
- Ticker: CSAV
- MER: 0.16%
- AUM: $4.56 billion
- Yield: 4.22% (Gross yield)
- Inception: June 14, 2019
This low-risk rated ETF invests primarily in high interest deposit accounts in Canada.
It offers monthly income distributions and is listed on the Toronto Stock Exchange.
CSAV has holdings in CIBC, National Bank, Scotiabank, and BMO.
4. Purpose High Interest Savings ETF
- Ticker: PSA
- MER: 0.16%
- AUM: $3.3 billion
- Yield: 4.09%
- Inception: October 10, 2013
Purpose High Interest Savings ETF is one of the oldest Cash ETFs in Canada.
It invests in high interest savings accounts at top-tier Canadian banks (National Bank, CIBC, and Scotiabank) and offers monthly distributions.
5. Horizons Cash Maximizer ETF
- Ticker: HSAV
- MER: 0.12%
- AUM: $2.07 billion
- Yield: 4.25% (Gross)
- Inception: February 5, 2020
The Horizon Cash Maximizer ETF also invests in high-interest deposit accounts; however, it is not expected to make taxable distributions. Net interest income earned is reinvested and reflected in the fund’s net asset value daily.
HSAV suspended new subscriptions on February 3, 2022, after reaching $2 billion in net asset value.
In addition to CASH and HISA, Horizons also offers the Horizon USD Cash Maximizer ETF (HSUV.U).
6. Ninepoint High Interest Savings Fund
- Ticker: NSAV
- MER: 0.14%
- AUM: $149 million
- Inception: November 17, 2020
- 1-year return: 1.67%; current interest rate from banks: 4.24%
Ninepoint High Interest Savings fund is offered as an ETF and mutual fund (Series A & F).
It is invested in high-interest savings accounts at Schedule 1 banks (BMO and TD as of March 2022) and has a low-risk rating.
This ETF is listed on the NEO Exchange.
- Ticker: CMR
- MER: 0.24%
- AUM: $327 million
- 1 year return: 1.02%
- Inception: February 19, 2008
Unlike the other ETFs on this list, CMR is a more traditional money market fund invested in short-term, high-quality debt instruments. Its top 10 holdings are in Ontario, Manitoba, and British Columbia; RBC, TD, National Bank, Nestle, Ontario Teachers, and MUFG Bank Ltd.
This fund is listed on the TSX and supports DRIP, PACC, and SWP.
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Money Market ETF Fees
When you buy a money market ETF, you can expect to pay a management expense ratio (MER) that includes the following:
- Management fees (includes investment manager salary, marketing, and other service fees)
- Sales taxes
The MER is calculated as a percentage of the ETF’s net asset value.
There may also be transaction and trading fees incurred by the fund.
When you buy the ETF, your brokerage may charge a trading commission (up to $10/transaction). This fee is waived by no-commission trading platforms like Questrade and Wealthsimple Trade.
Pros of Money Market ETFs
The benefits of Cash and HISA ETFs are:
- Provide exposure to high-interest deposit accounts
- Can easily be bought and sold throughout a trading day (i.e. very liquid)
- It may be appropriate for investors with a low risk tolerance
- Savings are held at Tier 1 Canadian banks
- Eligible for registered and non-registered investment accounts
- Usually provide income distributions
- No minimum balance or lock-up period
- Potentially higher yields than traditional savings accounts
Cons of Money Market ETFs
The downsides of money market ETFs include:
- Not protected by the Canada Deposit Insurance Corporation (CDIC)
- High management fees that eat into your returns
- Limited capital growth
Are Money Market ETFs Worth It?
If you have a long-term investment horizon and want to grow your capital over that time, you may be better off investing in a mix of stocks and bonds.
For capital preservation, Cash ETFs can be useful as they are low-risk and do not suffer significant volatility. You can also access your cash on short notice.
Related: TFSA vs Savings Account.