Popular cash management vehicles such as guaranteed investment certificates (GICs) or individual savings accounts provide numerous benefits to investors such as principal protection, which is especially important in the face of market volatility. However, some considerable downsides to these vehicles are: 1) these cash alternatives do not offer sufficient yield and are subject to inflation risk, making the real returns significantly lower; and 2) higher yield alternatives often come at the expense of lower liquidity.
An effective cash alternative
A potentially better cash alternative is a high-interest savings fund. CI First Asset High Interest Savings ETF (the "ETF"), which is listed on the Toronto Stock Exchange under the ticker symbol CSAV, can benefit investors with an attractive monthly income stream while preserving capital and liquidity by primarily investing in high-interest deposit accounts.
Flexibility and convenience
Unlike GICs, a high-interest savings fund provides daily liquidity and easy access to cash. There is no penalty for redemption and investors have the flexibility to withdraw cash at any time.
Holding the ETF as a portfolio position can provide benefits for investors across the risk spectrum. Aggressive investors can take advantage of portfolio liquidity for opportunistic purchases, while a cash alternative can make periods of higher volatility more tolerable by providing an anchor to reduce the swings in the value of portfolios.
Invest with confidence
The ETF's deposit holders consist of high-quality Schedule I Canadian Banks at a low management fee of 0.14%, allowing you to target an attractive yield while offering the safety and security of a savings account.
This communication includes information that has been obtained from third-party sources. Although the Portfolio Manager believes these independent sources are generally reliable, the accuracy and completeness of such information is not guaranteed and has not been independently verified, and CI First Asset assume no responsibility for any losses or damages, whether direct or indirect, which arise from the use of this third-party information and expressly disclaims liability for any errors or omissions in this information. Published July 26, 2019.