The federal banking regulator has some concerns about a popular, sensible type of exchange-traded fund that offers a 5 per cent yield with negligible risk.
HISA ETFs invest their assets in savings accounts at big banks that currently produce a gross yield of about 5.2 per cent, or close to 5.1 per cent after fees. The Office of the Superintendent of Financial Institutions is concerned about the effect on banks if investors holding HISA ETFs cashed out en masse. OSFI is accepting input from interested parties on these ETF until June 21. You can have your say by e-mailingOSFI says changes to HISA ETFs, if required, would take effect next year.
If you’re leaving a comment for OSFI, consider mentioning how you use HISA ETFs. Broadly speaking, these funds are not a hot-money product where money sloshes in and out in waves. HISA ETFs are being used to park cash in investment accounts, as an alternative to traditional savings accounts and as a replacement or diversifier for traditional bond ETFs.