Q: I am seeing higher yields on HISA ETFs vs bond ETFs. Is this right? If so--it seems like unless you want to bet on bonds going up, HISAs are the better option right now for conservative money. What do you think?
5i Research Answer:
HISA has a current indicated yield of 2.71%, down from a 12-month yield of 4.22%. One-year return 4.19%. XBB, as a general bond fund, has 3.32%/3.26% and a one year return 6.84%. CSAV is 2.80%/4.09%, one year 4.14%. The high interest ETFs are going to be more stable, but their yield will quickly respond to lower rates and move lower. Meanwhile, bond funds 'should' tick up with lower rates, at least in terms of NAV. High interest ETFs will be safer overall, with little risk from rising rates (yields will rise). So it really depends on an investors' objectives here.