Something happened in the world of exchange-traded funds (ETFs) in 2022, as interest rates rose. Canadian investors began buying ETFs that were cash-like high-interest savings accounts (HISAs) and money market products in big numbers for the first time. You may recall that both stock and bond markets were tumbling. These cash-alternative funds, by contrast, offered a safe haven to park your savings with almost no volatility and a rising income yield to boot. And unlike guaranteed investment certificates (GICs)—also experiencing a renaissance—they were highly liquid.
Stocks and bonds rebounded, of course. And new rules imposed by the Office of the Superintendent of Financial Institutions (OSFI) last fall made it harder for HISA ETFs to offer the very best risk-free interest rates going. (As of May 2024, they are mostly under 5%.) Money market funds, which hold debt investments that mature in six months or less, are now looking equally competitive.
Together, though, cash-alternative funds now account for more than 5% of Canadian ETF assets under management and remain among the more popular ETFs attracting new purchases. Canadian investors now see them as a convenient place to invest money they might need in the next year or two, whether in a TFSA or an FHSA, or a non-registered account. Cash-alternative funds are also a good option for holding a windfall you haven’t yet figured out how to allocate for the long term.
For that reason, we added this new category for 2024, identifying the best HISA and money market ETFs.
Our panel duly nominated a wealth of candidates. Global X—formerly called Horizons, until it rebranded in March 2024—saw its money market fund Global X 0-3 Month T-Bill ETF (CBIL) top the voting. There was a three-way tie for second place, with the BMO Money Market Fund ETF (ZMMK), Purpose High Interest Savings Fund (PSA) and Global X High Interest Savings ETF (CASH) all proving popular. By holding a combination of HISA accounts and short-term T-bills, PSA managed to eke out a current yield of 5.06% as of May 2024, the highest of the bunch.
In the table below, you’ll find the best cash-alternative ETFs in Canada, as judged by our panel. Slide the columns right or left using your fingers or mouse to reveal more data. You can download the data to your device in Excel, CSV and PDF formats.
Best cash-alternative ETFs
| wdt_ID | Fund name | Ticker | Management fee | MER | Holdings | Description |
|---|---|---|---|---|---|---|
| 1 | Horizons 0-3 Month T-bill | CBIL | 0.10% | 0.11% | n/a | Holds A-1+ rated Canadian govt treasuries with avg 4.86% YTM, virtually no credit risk |
| 2 | BMO Money Market Fund ETF Series | ZMMK | 0.28% | 0.13% | 218 | Holds bonds and notes <3 months to maturity, current yield 5.05% |
| 3 | Purpose High Interest Savings Fund | PSA | 0.15% | 0.15% | 3 | Combo of HISA and T-bill assets, current yield 5.3%, decent liquidity |
| 4 | Horizons High Interest Savings | CASH | 0.10% | 0.11% | 3 | Holds deposits at Schedule 1 banks, current yield 4.81%, $4.9b AUM |
| Fund name | Ticker | Management fee | MER | Holdings | Description |
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- The best TFSAs in Canada
- The best RRSP investments
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