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Email this6:25 pm
January 15, 2014
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Happy interest earning day! (come on you don't stay up until 2am to see your account balance grow on the 1 of each month.... nor do I, sleep is just too precious).
It just so happens my Tangerine offer for 2.6% ended so it was time to shop around. One thing that has caught my attention are these HISA ETFs, there are six in Canada with CSAV, HISA, CASH, NSAV, PSA and HSAV
I will focus on HISA and HSAV here after pouring over things.
HINT: HISA has the lowest MER at %0.05, at least until January 2023 when i suspect it may change??? TBD.
HSAV may have tax advantages discussed below.
Warning, this option isn't for the uninitiated ie. you need a brokerage account and must feel comfortable trading ETFs to consider this and make it worthwhile.
So, here's the thing, the highest savings account as I write returns like %3.3 (maybe %4 if you sign up for RBC's eSavings for 3 months). However, these HISA ETFs are now looking at yields of 3.75% minus fees (~.15% and maybe a trade fee).
In my opinion, these funds are the big players in the high interest savings arena, with the most "value" to throw around at banks... after trying to call-in to Tangerine to win the interest lottery with my tiny emergency fund (no luck), this seems like the best option.
FWIW, I will highlight some disadvantages:
1. Not CDIC insured, but honestly, if this every was an insurance that had to be used, there would likely be bigger issues... so not that concerned.
2. Tax considerations: For a non-registered account while HISA would pay out dividends taxed in full, HSAV has no dividends and you can pay tax as capital gains (I think...), else you'd have to sell HISA right before dividend date each month and possibly take a small hit due to the spread.
3. Some brokerages do not offer all these or instead offer their own Investment Savings account, (likely at a lower rate, but please correct me if I am wrong, NBDB for instance has NBC100 only at %2.90 as of this writing).
So there you have it, just thought this deserved to end up on recent discussions given the current market. Hope this post should add some value and helps someone out.
Cheers
6:41 pm
October 27, 2013
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These, or at least a few pioneers, have been around for quite some time, 2013 for the Purpose one. This link provides a pretty good summary of them and this site has talked about them as well. One must know how to trade them, and unless one has a zero commission brokerage OR is investing large sums, those costs will eat into returns.
A recent G&M article explains how many/most mainstream discount brokerages won't sell these because they compete with their in-house ISA products. It is a conflict of interest but so far the regulator isn't doing anything about it.
8:43 pm
April 27, 2017
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“ Not CDIC insured, but honestly, if this every was an insurance that had to be used, there would likely be bigger issues... so not that concerned.”
Its a very real extra risk. Institutions like those behind these saving vehicles have gone broke in the past. Similar scenarios could play out in the not too distant future with at risk mortgage portfolios.
2:40 am
November 18, 2017
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AltaRed:
It is a conflict of interest but so far the regulator isn't doing anything about it.
There's no requirement for any financial institution to sell all available financial products. Some may choose to sell only their own, or a select mix, according to worries about cannibalizing their own sales or selling products that don't reward them enough on sales.
So there's no concern for regulators.
musicalmaestr: That should be "Poring," not "Pouring." The former means studying intensely; the latter means allowing a substance (liquid, powder, people) or emotion to flow over or into something.
RetirEd
RetirEd
6:05 am
March 30, 2017
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mordko said
“ Not CDIC insured, but honestly, if this every was an insurance that had to be used, there would likely be bigger issues... so not that concerned.”Its a very real extra risk. Institutions like those behind these saving vehicles have gone broke in the past. Similar scenarios could play out in the not too distant future with at risk mortgage portfolios.
Yes there are certainly a potential credit risk in these HSAV. Think of these as a money market fund. They were never suppose break the $1 mark but during the financial crisis, a few did...
6:33 am
August 10, 2018
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AltaRed said
These, or at least a few pioneers, have been around for quite some time, 2013 for the Purpose one. This link provides a pretty good summary of them and this site has talked about them as well. One must know how to trade them, and unless one has a zero commission brokerage OR is investing large sums, those costs will eat into returns.A recent G&M article explains how many/most mainstream discount brokerages won't sell these because they compete with their in-house ISA products. It is a conflict of interest but so far the regulator isn't doing anything about it.
From your link, HSAV appears to be the only one with a $US denominated HI MMF. Does anyone know of others?
6:45 am
August 10, 2018
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Just checked with my TD Waterhouse account. None of these products are offered through TD Waterhouse.
6:58 am
October 27, 2013
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Bruford said
Just checked with my TD Waterhouse account. None of these products are offered through TD Waterhouse.
The G&M article is behind paywall https://www.theglobeandmail.com/business/article-banks-cash-hisa-etfs/ but it is pretty typical that some bank brokerages do not. CIBC, NB, and Scotia iTrade (but not Scotia Mcleod) are a few that do. I do not know about independents like Questrade et al.
I also don't know which ones offer USD options because I've never been interested in purchasing them.
P.S. Regarding post #4, I believe brokerages should be required to offer everything traded on the public stock exchanges, i.e. whatever can be publicly traded on the TSX should be offered by every brokerage. Imagine if a TD brokerage refused to allow investors to buy/sell bank stocks other than TD.
12:34 pm
October 19, 2022
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Bruford said
From your link, HSAV appears to be the only one with a $US denominated HI MMF. Does anyone know of others?
HSAV (CA) > HSUV.U (US)
PSA (CA) >PSU.U (US)
HISA (CA) >HISU.U (US)
11:23 am
March 18, 2021
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musicalmaestro said
Happy interest earning day! (come on you don't stay up until 2am to see your account balance grow on the 1 of each month.... nor do I, sleep is just too precious).It just so happens my Tangerine offer for 2.6% ended so it was time to shop around. One thing that has caught my attention are these HISA ETFs, there are six in Canada with CSAV, HISA, CASH, NSAV, PSA and HSAV
I will focus on HISA and HSAV here after pouring over things.
HINT: HISA has the lowest MER at %0.05, at least until January 2023 when i suspect it may change??? TBD.
HSAV may have tax advantages discussed below.Warning, this option isn't for the uninitiated ie. you need a brokerage account and must feel comfortable trading ETFs to consider this and make it worthwhile.
So, here's the thing, the highest savings account as I write returns like %3.3 (maybe %4 if you sign up for RBC's eSavings for 3 months). However, these HISA ETFs are now looking at yields of 3.75% minus fees (~.15% and maybe a trade fee).
In my opinion, these funds are the big players in the high interest savings arena, with the most "value" to throw around at banks... after trying to call-in to Tangerine to win the interest lottery with my tiny emergency fund (no luck), this seems like the best option.
FWIW, I will highlight some disadvantages:
1. Not CDIC insured, but honestly, if this every was an insurance that had to be used, there would likely be bigger issues... so not that concerned.
2. Tax considerations: For a non-registered account while HISA would pay out dividends taxed in full, HSAV has no dividends and you can pay tax as capital gains (I think...), else you'd have to sell HISA right before dividend date each month and possibly take a small hit due to the spread.
3. Some brokerages do not offer all these or instead offer their own Investment Savings account, (likely at a lower rate, but please correct me if I am wrong, NBDB for instance has NBC100 only at %2.90 as of this writing).So there you have it, just thought this deserved to end up on recent discussions given the current market. Hope this post should add some value and helps someone out.
Cheers
BMO InvestorLine won't even let you buy CSAV or PSA but they'll let you sell both of them. Canada isn't a great country for investors.
8:42 pm
April 6, 2013
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It isn't going to be worthwhile anyways at BMO InvestorLine. If they were allowed, CSAV and PSA would cost $9.95 to buy. To sell, it would be another $9.95. That $19.90 in commissions will eat seriously into the net yield when parking funds for a few months.
Need to find something else at BMO InvestorLine or switch to another discount broker.
10:36 am
May 1, 2020
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I've been looking at this recently to figure out where to park some cash for a while. It wasn't relevant the past couple years with every savings account giving me basically nothing. But now Tangerine stuck in the dark ages at 1% while interest rates have gone up.
My RRSP and TFSA are at Questrade, so never really carried too much cash. I only discovered ISAs because I also have BMO Investorline, also not too much cash, but I needed to park some money temporarily and didn't want to lock in a GIC, and found their ISA paying 2.9%.
Anyway, I'd been making some more contributions to Questrade and was thinking about diversifying my fixed income away from bond funds (though maybe it's a good time to buy, they are down b/c of interest rates). So that led me to HSAV, and CASH. I'm reading that HSAV looks more tax efficient than CASH, but maybe someone can explain that to me? It's relevant because some other money I want to park is in non-registered accounts.
So in considering HSAV, I'm not finding the answer to my question about how you get paid. I get that the earnings, which are based on the yields of the underlying ISA products, are reinvested and not paid out as income. So I pay the CG on selling. But since the price of HSAV seems to try to stay around $50, does that mean over time I receive more units of HSAV??
I'm confused as to how the value of my holding grows if I'm not paid out with income, unless it means I get more units. Thanks.
11:09 am
October 19, 2022
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digitalatlas said
I've been looking at this recently to figure out where to park some cash for a while. It wasn't relevant the past couple years with every savings account giving me basically nothing. But now Tangerine stuck in the dark ages at 1% while interest rates have gone up.My RRSP and TFSA are at Questrade, so never really carried too much cash. I only discovered ISAs because I also have BMO Investorline, also not too much cash, but I needed to park some money temporarily and didn't want to lock in a GIC, and found their ISA paying 2.9%.
Anyway, I'd been making some more contributions to Questrade and was thinking about diversifying my fixed income away from bond funds (though maybe it's a good time to buy, they are down b/c of interest rates). So that led me to HSAV, and CASH. I'm reading that HSAV looks more tax efficient than CASH, but maybe someone can explain that to me? It's relevant because some other money I want to park is in non-registered accounts.
So in considering HSAV, I'm not finding the answer to my question about how you get paid. I get that the earnings, which are based on the yields of the underlying ISA products, are reinvested and not paid out as income. So I pay the CG on selling. But since the price of HSAV seems to try to stay around $50, does that mean over time I receive more units of HSAV??
I'm confused as to how the value of my holding grows if I'm not paid out with income, unless it means I get more units. Thanks.
HSAV doesn't pay interest as Monthly Dividends. Instead, they reinvest that into High-Interest Saving Accounts. Its NAV grows every day. (theoretically, the ETF price goes up as well). You get paid the price difference when you sell your HSAV ETF. If I am right, monthly dividends are taxed fully as Other Income to CRA. How about HSAV? Is it taxed only 50% to CRA as Capital Income?
1:07 pm
October 27, 2013
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deleted
1:09 pm
April 6, 2013
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I would stay away from the Horizons Cash Maximizer ETF (HSAV).
It currently trades around $103.75 which is above its current net asset of $102.9719. One is effectively paying $1.007556 for each $1 of cash.
Horizons ETFs warns about the situation in their February news release:
In January 2021, Horizons ETFs announced that it would suspend subscriptions of HSAV once its NAV exceeded $1.5 billion. It is the Manager’s view that this suspension will help manage potential tax implications and ensure that HSAV can continue to reinvest its distributions, consistent with HSAV’s current investment objectives.
…
This suspension of subscriptions will not affect the ability of existing shareholders of HSAV to sell their shares in the secondary market at a price reflective of at least its NAV per share, assuming normal course market conditions. However, investors and potential investors should note that during a period of suspended subscriptions, the Manager expects shares of HSAV to trade at a premium to its NAV per share. Due to this expected premium, Horizons ETFs is strongly discouraging purchases of shares of HSAV during this suspension of subscriptions.
7:20 pm
May 1, 2020
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Oh right, seems I was looking at the wrong graph. I was looking at CSAV and saw the price around 50 consistently, but I guess that's holding ISAs from bank instead of the fancy swaps in HSAV, with the increasing price over time.
I guess CASH is an alternative, but doesn't seem to be that much of an advantage over the ISA from BMO Investorline or TD DI. It's not a trivial amount of cash, but at the same time, if I really was planning to hold for a while, I'd probably put it into some equities.
Thanks for pointing that out. I'd read about the suspension, but I guess it also means trading at a premium...
9:34 am
December 12, 2009
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mordko said
“ Not CDIC insured, but honestly, if this every was an insurance that had to be used, there would likely be bigger issues... so not that concerned.”Its a very real extra risk. Institutions like those behind these saving vehicles have gone broke in the past. Similar scenarios could play out in the not too distant future with at risk mortgage portfolios.
It's an added risk, to be sure, but given that the funds typically invest only in HISA and GIC products from Big Six Canadian chartered banks, the risk is no more than exceeding one's CDIC insured limits with a Big Six Canadian chartered bank (something I suspect most people on this forum do already), it's extremely low added risk.
The greater risk is a liquidity event in which the fund manager will not be able to mark-to-market the units of the ETF to a constant $50.00 Net Asset Value, and you may have to sell your investment at below the ETF's Net Asset Value, should you immediately require the cash and be forced to sell.
If you are a frequent trader, I agree with AltaRed that the commissions will eat into returns, but if you only buy once and sell once in a given year, $20.00 in commissions on the premium returned being earned and immediate access to funds (i.e., funds sold in a brokerage ISA are not always immediately made available in one's trade date cash, but funds sold in a cash ETF are), they can be worthwhile.
I currently do not hold any, but if I were, I'd probably prefer the Evolve HISA product.
They were also started at a time when brokerages refused to sell series F versions of their ISAs. Now that they're prohibited from doing that, one benefit is we can buy the series F versions (no trailer fees) of their ISAs. The downside of that regulatory move, though, is they've added trading commissions to third-party mutual funds, which is why I wonder if Mawer will restart a direct-to-consumer investment platform, as I expect they will see diminished fund flows into their funds following that move. Steadyhand already does it, so I can see Mawer doing it, too.
Cheers,
Doug
8:50 pm
October 21, 2013
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Interesting insight about Mawer and Steadyhand, Doug. I didn't realize Steadyhand made that change.
9:31 pm
October 27, 2013
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Doug said
They were also started at a time when brokerages refused to sell series F versions of their ISAs. Now that they're prohibited from doing that, one benefit is we can buy the series F versions (no trailer fees) of their ISAs. The downside of that regulatory move, though, is they've added trading commissions to third-party mutual funds, which is why I wonder if Mawer will restart a direct-to-consumer investment platform, as I expect they will see diminished fund flows into their funds following that move. Steadyhand already does it, so I can see Mawer doing it, too.Cheers,
Doug
One quibble with the above. The ISAs do not fall under mutual fund regulatory jurisdiction so are not covered by that trailer fee elimination mandate effective June 1st. To my knowledge based on internet chatter, nothing much has changed with the ISAs, i.e. most brokerages (big bank ones at least) still restrict the sale of their in-house ISAs to retail investors to Series A with their 10-15bp trailer fee and they don't charge commissions. F series remain out-of-reach except for advisor fee based accounts. The one exception I know of is Scotia iTrade which is permitting the sale of their F series (no trailer fee versions) to their account holders.
To my knowledge, BMOIL and Scotia iTrade both still permit the purchase /sale of Mawer Series A funds (no trailer fee) with no commission....as they have done in the past (I've done so in both brokerages in the past). However, it could make sense though for Mawer to revert back to a direct sales model if some of the discount brokerages now charge buy/sell commissions.
In one particular case, RBC DI never did allow their clients to purchase trailer fee Mawer funds, but as of June 1st pretty much had to relent and do it, but now charge commissions to buy/sell.
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