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There's no CDIC or FDIC deposit insurance coverage on the Horizons HISA ETF's.

Horizon says so in the disclaimers of their November FAQ document:

DISCLAIMERS

Commissions, management fees, and expenses all may be associated with an investment in the Horizons High Interest Savings ETF (CASH), Horizons Cash Maximizer ETF (HSAV), Horizons USD Cash Maximizer ETF (HSUV.U), Horizons 0-3 Month T-Bill ETF (CBIL), and Horizons 0-3 Month U.S. T-Bill ETF (UBIL.U) or the (“ETFs”) managed by Horizons ETFs Management (Canada) Inc. The ETFs are not covered by the Canada Deposit Insurance Corporation, the Federal Deposit Insurance Corporation or any other government deposit insurer. …

There's more risk than just the risk of the banks the defaulting. There's also risk of the ETF not being able to withdraw those bank deposits fast enough should there be substantially more sellers of the ETF units than there are buyers.

When it looked into the deposits, OSFI was told that those deposits from the ETF's have "extensive withdrawal notification periods" to help make the deposits stable for the banks accepting the deposits.

No, it doesn't.

Your reasoning is flawed. There's no bank failure if a bank refuses to provide funds early for a deposit that requires 30-, 60-, or 90-days notice of withdrawals.

Stability of deposits has nothing to do with loyalty. Another flawed reasoning. Certain kinds of deposits are more stable. OSFI recognizes that through the different liquidity adequacy requrements for different kinds of deposits.

Retail deposits that are insured can be backed by a bank by as little as 3% of their possibile 30-day runoff. In contrast, the "Unsecured wholesale funding provided by other legal entity customers" from those so-called cash ETF's need to be backed by 100% of their possibile 30-day runoff.

Norman1 said
There's no CDIC or FDIC deposit insurance coverage on the Horizons HISA ETF's.

Horizon says so in the disclaimers of their November FAQ document:

DISCLAIMERS

Commissions, management fees, and expenses all may be associated with an investment in the Horizons High Interest Savings ETF (CASH), Horizons Cash Maximizer ETF (HSAV), Horizons USD Cash Maximizer ETF (HSUV.U), Horizons 0-3 Month T-Bill ETF (CBIL), and Horizons 0-3 Month U.S. T-Bill ETF (UBIL.U) or the (“ETFs”) managed by Horizons ETFs Management (Canada) Inc. The ETFs are not covered by the Canada Deposit Insurance Corporation, the Federal Deposit Insurance Corporation or any other government deposit insurer. …

They have to say that, yes, because ETFs and mutual funds are not CDIC insured, but, where in the CDIC Act and/or Regulations does it say that an investment fund holding a CDIC eligible deposit makes that CDIC eligible deposit no longer eligible for CDIC deposit insurance for the first $100,000 just like any other eligible depositor?

In short, I believe the passage you're referencing refers to the ETFs or mutual funds themselves not being eligible for CDIC insurance, which is absolutely true. I'm talking about the underlying deposits within the ETF and, specifically, the first $100,000 of those deposits.

Cheers,
Doug

zgic said

Thanks Doug.
Sorry, little confused, are you saying that the HISA ETFs are covered by CDIC for 100,000 in your statement above?
Looking for that here
https://horizonsetfs.com/ETF/hsav/#product-facts  

No, the ETFs themselves, like mutual funds are not CDIC insured. What I am suggesting is that the HISA ETF is the legal non-personal entity which holds the underlying deposits, investments, securities, and/or uninvested cash, and that the first $100,000 held in a Canadian deposit account of a CDIC member institution would be CDIC insured, not the ETF itself. Practically speaking, this doesn't mean anything for an ETF holding over $5 billion in in assets.

Cheers,
Doug

Doug said

They have to say that, yes, because ETFs and mutual funds are not CDIC insured, but, where in the CDIC Act and/or Regulations does it say that an investment fund holding a CDIC eligible deposit makes that CDIC eligible deposit no longer eligible for CDIC deposit insurance for the first $100,000 just like any other eligible depositor?

In short, I believe the passage you're referencing refers to the ETFs or mutual funds themselves not being eligible for CDIC insurance, which is absolutely true. I'm talking about the underlying deposits within the ETF and, specifically, the first $100,000 of those deposits.
…

Not all deposits issued by a CDIC member have deposit insurance. Deposits can be set up to not have coverage. Deposit notes from CDIC member Home Trust, for example, don't have CDIC coverage.

That can be done when CDIC deposit insurance is not useful. Horizons High Interest Savings ETF (CASH) is around $4.6 billion divided between three CDIC members. Maximum CDIC coverage would be $300,000 or 0.0065% of the ETF's deposits. 99.9935% of the money not covered. Not useful.

Current yields of these Cash ETFs have now dropped back to circa 5% (or less) range and CSAV in particular is under 5%. There is no longer any advantage to these over some of the better MMFs. Whether one goes for one product form, or the other, may depend on the commission schedule one's brokerage may have for one, or the other, product.

AltaRed said
Current yields of these Cash ETFs have now dropped back to circa 5% (or less) range and CSAV in particular is under 5%. There is no longer any advantage to these over some of the better MMFs. Whether one goes for one product form, or the other, may depend on the commission schedule one's brokerage may have for one, or the other, product.  

Yes, I'd mostly agree with this. I personally have no need for HISA ETFs; however, I will recommend them:

• For people with a discount brokerage without access to conventional ISAs (i.e., Wealthsimple Trade, Moomoo Financial Canada, WeBull Canada, etc.)
• For people with no fee-free access to conventional ISAs (i.e., Questrade)
• For people who require same-day liquidity and cannot wait until the settlement date for the available trading cash balance to increase (i.e., Big Five-bank-owned discount brokerages

That's pretty much the use case for them.

Cheers,
Doug

COIN said
Why not park your funds in an HISA?  

Lots of reasons. Money could be within an investment brokerage account and hard to move out, eg for tax reasons (RRSP, TFSA, Corporate account, etc).

Alternatively someone might be trying to time the stock market and needs so-called “dry powder” to be available in a brokerage at a moment’s notice.

Last but not least, these products pay more interest than standard, non-promotional HISAs with the exception some WS deals.

Max said
Is the Distribution of the payout of CASH.TO calculated on a daily basis? If the ETF is sold at the middle of the month does it void the interest for the month?  

note Ex-Dividend Dates
https://dividendhistory.org/payout/tsx/CASH/

COIN said
Why not park your funds in an HISA?  

ISAs trade only at the end of the business day, on a T+1 settlement date. Stocks and ETFs trade on a T+1 settlement date as well, but trade intraday. If your intention is to park the uninvested cash allocation for a short term (i.e., 3 months or less), then a HISA ETF may make more sense so your same-day trade date available cash balance is updated in real-time when you sell.

For long-term allocations to cash (i.e., over three months), or for the portion allocated to an emergency fund, I recommend ISAs over HISA ETFs because (a) you control the deposits directly and (b) there is CDIC insurance available.

Cheers,
Doug