High interest savings ETF are financial instruments designed to give investors a means to save capital while earning a competitive interest rate. Furthermore, they can provide investors with better returns than typical savings accounts or money market funds (while maintaining a high level of liquidity and safety, one of their main benefits).
These ETFs are made to follow an index of short-term, high-quality fixed income securities, like bonds issued by governments, companies, or the money market.
Risk involved
High interest savings ETFs are often seen as relatively low-risk investments, in contrast to stocks or other types of investments.
Overall, investors looking for a low-risk strategy to generate a competitive rate of return on their capital may find high-interest savings ETFs to be an appealing investment option. High-interest savings ETFs can be valuable to any investment portfolio due to their diversification, liquidity, and potential for better returns.
Best High-Interest Savings Account ETFs
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Forward dividend yield and Management fees
| Symbol | Forward Div Yld | Trailing Div Yld | Fees |
|---|---|---|---|
| CSAV.TO | 4.72% | 2.51% | 0.15% |
| CASH.TO | 4.79% | 2.65% | na |
| HISA.NE | 4.46% | 2.64% | 0.15% |
| PSA.TO | 4.59% | 2.27% | 0.16% |
| NSAV.NE | 4.74% | 2.41% | 0.43% |
You can click on the ticker of each ETF to visit the issuer’s website. Please note the dividend yield shown on the issuers’ websites corresponds to the forward dividend yield. The latter is a projection based on the last dividend paid.
The trailing dividend yield shown in the table above is the dividend yield calculated using the dividend paid in the last 350 days.
Difference between Forward and Trailing dividend yield
Dividend Yield (Forward) = (Most Recent Dividend * Dividend Frequency) / Price
Forward dividend yield and trailing dividend yield are both measures of a company’s dividend payout to its shareholders, but they differ in the time period used to calculate them.
Trailing dividend yield is calculated based on the dividends paid over the past 12 months, divided by the current stock price. It provides an indication of how much a company has paid out in dividends over the past year, relative to its current stock price.
Forward dividend yield, on the other hand, is calculated based on the expected dividends that will be paid out in the future, divided by the current stock price. It provides an indication of how much a company is expected to pay out in dividends over the next 12 months, relative to its current stock price.
The main difference between the two is that forward dividend yield is a projection of what is expected to happen in the future, whereas trailing dividend yield is based on actual historical data. As a result, forward dividend yield can be more speculative and less reliable than trailing dividend yield.
Investors may use both measures in combination to get a more complete picture of a company’s dividend payout.
GIC vs High interest saving ETFs
| Investment Option | GIC | High-Interest Savings ETF |
|---|---|---|
| Type of Investment | Low-risk | Low to moderate risk |
| Return | Guaranteed fixed rate of return | Potentially higher rate of return |
| Term | Typically 1 to 5 years | No fixed term |
| Interest Rate | Typically higher than savings accounts | Varies depending on market conditions |
| Risk | Very low risk | Higher risk than GICs |
| Guarantee | Guaranteed by the issuing institution | No guarantee of return |
| Suitability | Suitable for risk-averse investors | Suitable for those seeking higher returns with moderate risk tolerance |
High interest saving ETFs vs Dividend ETFs
High saving ETFs and dividend ETFs are two distinct types of investment vehicles that cater to different investment objectives. Let’s discuss each category and their characteristics to understand their differences.
High Saving ETFs:
High saving ETFs are designed to provide investors with exposure to assets that generate stable and relatively low-risk returns. These ETFs typically focus on preserving capital and generating income through investments in low-risk instruments such as government bonds, treasury bills, or high-quality corporate bonds. They are suitable for conservative investors who prioritize capital preservation and steady income over higher-risk investments.
Key features of high saving ETFs:
Capital preservation
Income generation
Lower volatility
Lower potential for capital appreciation
Dividend ETFs:
Dividend ETFs, on the other hand, are designed to invest in stocks or equity securities of companies that pay regular dividends. These ETFs focus on companies with a track record of consistent dividend payments and may include sectors such as utilities, consumer staples, or real estate investment trusts (REITs). Dividend ETFs are suitable for investors seeking income generation and potential capital appreciation through exposure to dividend-paying stocks.
Key features of dividend ETFs:
Dividend income: The primary objective is to provide a steady income stream through dividends paid by the underlying stocks.
Capital growth potential: Dividend ETFs invest in companies that have the potential for capital appreciation, allowing investors to benefit from both income and potential growth.
Moderate to higher volatility: Equity investments can be subject to greater price fluctuations compared to fixed-income investments.
Diversification: Dividend ETFs typically hold a diversified portfolio of dividend-paying stocks across various sectors and regions.
Choosing between high saving ETFs and dividend ETFs depends on your investment goals, risk tolerance, and time horizon. High saving ETFs are suitable for conservative investors seeking capital preservation and stable income, while dividend ETFs are more appropriate for investors willing to accept moderate risk in pursuit of income and potential capital growth.