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Purpose High Interest Savings Fund (PSA)
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Global X High Interest Savings ETF (CASH)
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Global X 0-3 Month U.S. T-Bill ETF (UBIL.U)
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Global X 0-3 Month T-Bill ETF (CBIL)
Q: My Son hopes to buy a condo in the next 6 months and has sold most of his stocks and now holds mainly cash. PSA, CASH, CBIL and UBIL.U all currently yield in the 5% range. I am thinking he is best to put most the funds in CBIL and UBIL.U, since these may benefit a bit if interest rates fall, whereas the yield in PSA and CASH would decrease. Or is he best to put funds in PSA or CASH and sacrifice a possible decrease in yield, for a safer investment in HISA ETFs. Thank you for your comments!!
5i Research Answer:
UBIL buys 0-3 month US treasury bills, so the short term nature means its leverage to rates is still going to be very low. Same with CBIL. The price variability on CBIL, for example, is only 29c per unit over the past year (high/low). Even with perfect execution (unlikely), perfect trading on it would only add 0.58% annually or 0.29% in six months, not including any costs. This sounds good but in reality is likely only going to minimal. UBIL of course also adds currency risk. This is a long way of saying we would be indifferent here. We would not consider the two discussed less risky as they own government securities only.