Ask Globe Investor: I was wondering about the risk of price declines for high interest savings accounts ETFs. Right now, the price of one share is fairly stable – like, for instance, at $50. Can you share your thoughts on that?The custom with HISA ETFs is for the price to be pegged at a base of $50 per unit.
Raj Lala, president and CEO of Evolve ETFs, said the price of a HISA ETF should not fall below $50. “The only risk of it dipping below $50 is if the Bank of Canada overnight rate becomes negative, or one of the Big Six banks becomes insolvent…obviously, very unlikely outcomes,” he said in an e-mail. Changes in HISA ETF returns track the overnight rate, which has jumped to 5 per cent from 0.25 per cent in early 2022. The big risk with these ETFs is a sharp decline in rates and, in turn, interest payouts. A 5 per cent return with minimal danger of losing money looks darn good. But if that return falls to, say, 2 to 3 per cent, investors may find themselves losing out on potentially much better stock market returns.of how their deposits at banks are accounted for.
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