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  5. CASH: How safe is something like CASH or PSA? [Global X High Interest Savings ETF]
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Q: How safe is something like CASH or PSA? I know they invest in the deposit accounts of banks and credit unions and are not protected by CDIC. But what is the worst case scenario? That one of the banks fails? Just trying to determine how much of a safety difference there is between these and a GIC. Thanks!
Asked by TK on March 22, 2024
5i Research Answer:

We would say they are as safe as one can get without an explicity guarantee. First, ETF assets are segregated from fund management companies. A fund manager failure can delay funds but is not likely to result in losses (other than market losses during such delay). In 2008, there were some issues with commercial paper due to the asset-backed market collapse, and some money market funds in the US did experience losses. But the scenario in Canada was better. A bank failure would likely be the worst-case scenario. The short term nature of these ETFs helps here, but if there was a 'run' on a bank then these ETF products could see massive selling and possible losses. More likely in such a case they might be halted while the government steps in to provide support to the troubled bank if the ETF had high exposure to the problem at hand, 

Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in PSA.