The concept for the high-interest exchange-traded fund is this: offer a competitive savings rate by investing client money in a portfolio of savings accounts from major financial institutions. CSAV offers a net after-fee yield of about 2.1 per cent, similar to PSA. Investment savings accounts are in the 1.5-per-cent range, so there’s definitely a yield advantage to the ETF option.as described here
, some brokers don’t allow clients to buy and sell any cash-type investment product other than their own in-house version. Depending on the broker, if you tried to buy PSA, for example, your trade would be rejected. The second issue with high-interest ETFs is that most brokers will charge you as much as $10 a buy-and-sell trade. Those costs will bite deeply into your interest gains if you have a small holding or trade frequently.
Questrade and Virtual Brokers have no buy commissions on ETFs, which remove half of the cost of using high-interest ETFs. National Bank Direct Investing waives ETF commissions entirely if you trade a minimum 100 shares. A simple commission-saving alternative for clients of all brokers is the mutual-fund version of CSAV, the CI High Interest Savings Fund.
The estimated management expense ratio for the fund is 0.3 per cent, which would bring down the net yield to about 2 per cent . Losing a bit of yield in exchange for no buy and sell commissions makes sense for investors who hold small amounts of cash and trade frequently.This is the Globe Investor newsletter, published three times each week.
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