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Cash ETF

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Cash exchange-traded funds (Cash ETFs) are products that belong to the cash and cash equivalents asset class. The units/shares trade on Canadian stock exchanges, are accessed through a discount broker, but are partly equivalent to a savings account. There are two main types of cash ETFs in products identified as such by the Toronto Stock Exchange ETF Screener. The first type is similar to high-interest savings accounts (HISAs) and these products are often known as HISA ETFs.[1][2] The second type, which became popular more recently, is the ETF equivalent to a money market mutual fund.

This article explains how each type of cash ETF works, what are the pros and cons, provides examples of cash ETFs trading in Canada and mentions possible alternatives.

HISA ETFs

How they work

When you buy a HISA from an online bank or when you buy an Investment Savings Account (ISA) trading as a mutual fund from a discount broker, you are in effect depositing your money directly with that institution. Instead, HISA ETFs pool deposits from many investors and then deposit the money in the ETF’s name at Canada's major banks, and sometimes at other financial institutions.[1] This allows those ETFs to potentially negotiate better yields than small individual savers would get on a consistent basis (ignoring special offers and so on). Each HISA ETF typically spreads its deposits at several Canadian banks, providing a form of diversification.

The net asset value (NAV) (and price) of HISA ETFs is generally close to $50 per share/unit. In detail, the NAV (and price) increases progressively between monthly distributions because of accrued interest.[1][3] After the distribution becomes due, the NAV (and price) fall back to $50.[4]

Regulatory review

HISA ETFs were reviewed by the Office of the Superintendent of Financial Institutions in 2023.[2][5] On October 31, 2023, the regulator confirmed a rule change[6] that made HISA ETFs less competitive.[7]

A potential worry is that some HISA ETFs might venture into "securities with higher yield and potentially more credit risk"[8] in an attempt to keep their yields up. So investors will "want to keep a close watch on how the various product sponsors respond to this news".[8] As of April 2025, some HISA ETFs from the list below hold a portion of their funds in very safe Canadian treasury bills (money market instruments issuer by the federal government), but nothing more exotic so far.

Money market ETFs

Money market ETFs directly compete with the HISA ETFs. They are like money market mutual funds that trade on stock exchanges.[9][10] They invest in treasury bills (T-bills) from governments and private sector instruments with less than a year to maturity (such as commercial paper). Private sector instruments are considered more risky than T-bills and provide higher yields.

A subtype of money market ETF is the T-bill ETF which only buys... T-bills. Since T-bills are government-issued, no CDIC guarantee is necessary. T-bill ETFs should generally have lower yields than money market ETFs with a broader mandate (which also hold private sector instruments for which there is credit risk that must be compensated with a higher yield).

Similarly to HISA ETFs, money market ETFs typically have a NAV and price near $50. Both the NAV and price rise progressively until the day before the ex-date, then the NAV falls back to $50 on the ex-date. The distribution is actually paid (in cash) a few days later. As an example, the following chart shows the NAV (green line, green numbers), closing prices (black line) and distributions (red numbers) of a specific money market ETF in the first 3.5 months of 2025:



This is a different mechanism than for money market mutual funds, which have a stable NAV and pay distributions as additional units.

The MERs are in the 0.1-0.2% range[11], including fee waivers.

Pros and cons

The biggest attraction of cash ETFs of both types is their competitive yields, and this explains their rapid growth in assets under management. Unlike non-cashable Guaranteed Investment Certificates (GICs), they are very liquid.

Disadvantages include:

  • They are considered slightly more risky than a traditional HISA or a GIC because (1) there is no CDIC guarantee, even on amounts less than $100k, given the pooling of the funds in HISA ETFs, and the nature of money market ETFs; (2) the units can trade below their NAV;[1]
  • Brokerage trading commissions and bid-ask spreads can reduce net returns over short periods and/or on small amounts;
  • You have to check currents prices versus the NAV before buying or selling.

Members of the Financial Wisdom Forum (FWF) have reported being unable to buy HISA ETFs at certain discount brokers (see FWF topic below). The common interpretation is that those bank-owned discount brokers are protecting their in-house ISAs or money market funds (in mutual fund or ETF format) from competition. Money market ETFs may be available at certain brokers where HISA ETFs are blocked from purchase.[11]

Canadian exchange listed ETFs

Examples of cash ETFs trading in Canadian dollars on Canadian exchanges include:[1][12]

As of: April 18, 2025
Type Symbol Fund name MER (%) AUM (M$)
HISA TSX: CASH Global X High Interest Savings ETF 0.11 6,488
HISA TSX: CSAV CI High Interest Savings ETF 0.15 6,270
HISA TSX: HSAV Global X Cash Maximizer Corporate Class ETF 0.20 1,879
HISA TSX: PSA Purpose High Interest Savings Fund 0.16 4,600
HISA CBOE: HISA Evolve High Interest Savings Account Fund 0.15 3,272
Money Market TSX: CBIL Global X 0-3 Month T-Bill ETF 0.11 1,655
Money Market TSX: CMNY CI Money Market ETF 0.15 38
Money Market TSX: CMR iShares Premium Money Market ETF 0.13 1,936
Money Market TSX: GCTB Guardian Ultra-Short Canadian T-Bill Fund 0.16 317
Money Market TSX: MNY Purpose Cash Management Fund 0.22 1,900
Money Market TSX: ZMMK BMO Money Market Fund 0.13 4,610
Short Term F.I. TSX: TCSH TD Cash Management ETF 0.16 348

Alternatives

Alternatives to cash ETFs include normal HISAs, cashable GICs, and money market mutual funds, including T-bill mutual funds.

Further reading

References

  1. ^ a b c d e Raymond Kerzérho, High Interest Savings Account ETFs, PWL Capital, October 13, 2022, viewed August 23, 2023.
  2. ^ a b Rob Carrick, High interest savings ETFs now pay 5 per cent, but that’s over if regulators step in, The Globe and Mail, Updated June 20, 2023, viewed August 22, 2023.
  3. ^ Investment Executive, Taking interest in high-interest ETFs, August 6, 2019, viewed September 10, 2023.
  4. ^ Evolve ETFs, High Interest Savings Account Fund, Frequently asked questions, March 2, 2022, viewed September 10, 2023.
  5. ^ OSFI reviewing liquidity treatment of high-interest savings account ETFs, Investment Executive, May 10, 2023, viewed August 24, 2023.
  6. ^ OSFI, OSFI upholds 100% liquidity requirement for HISA ETFs to promote financial resilience, October 31, 2023, viewed November 3, 2023.
  7. ^ Globe and Mail, Canada’s banking watchdog cracks down on high-interest cash ETFs that retail investors love(subscription required), October 31, 2023.
  8. ^ a b Post by DanH on the Financial Wisdom Forum, November 1, 2023.
  9. ^ Canadian ETF Flows for July 2023, National Bank Financial report, viewed August 24, 2023.
  10. ^ Investment Executive, With HISA ETFs under review, manufacturers push alternatives, July 24, 2023, viewed September 6, 2023.
  11. ^ a b Investment Executive, Interest in money-market ETFs heats up as yields rise, June 13, 2023, viewed August 25, 2023.
  12. ^ "TSX ETF Screener". TMX Money. January 10, 2025. Retrieved 2025-01-13.
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