By Ambrose O’Callaghan
Rising interest rates have made short-term fixed income much more attractive today compared to the 2010s when interest rates were historically low following The Great Recession. The prevailing high interest rates provide attractive opportunities for investors to place their cash reverses in short-term investment vehicles that are safe and accessible.
This year, Harvest ETFs launched the Harvest Canadian T-Bill ETF (TBIL:TSX). This exchange-traded fund (ETF) is a low-risk cash vehicle that pays competitive interest income. That income comes from investing in Treasury Bills (“T-Bills”) issued by the Government of Canada.
Notably, investors have turned to High Interest Savings Accounts (HISA) due to the rapid rise in interest rates. This is the telltale sign that investors are looking to get more bang for their buck in a secure account. The Harvest TBIL ETF stands as an alternative cash proxy that combines security, stability, and steady monthly income that investors are searching for in a standard HISA.
What makes a cash proxy attractive at this stage?
A cash proxy like TBIL is attractive in this market because it offers low risk and high liquidity. The ETF invests in Government of Canada T-Bills with maturities between 0-90 days, that are known for their safety as they are secured by the full faith of the Government of Canada. In addition, they are highly liquid short-term bonds with little or no price fluctuation, which helps to preserve invested capital.
More specifically, short-term bills have the advantage of being are less sensitive to interest rate changes compared to long-term bonds. That offers stability in the current economic climate, making an investment vehicle like the TBIL ETF that has 100% invested in TBILLs an optimal option to preserve your invested cash reserves.
TBIL combines steady income along with safety and stability. To achieve this, TBIL invests in short-term Government of Canada Treasury Bills. The yields on T-Bills are currently much higher than in recent years and they provide consistent and predictable returns. This makes your cash stay productive even amidst market volatility.
Benefits of TBIL as a Cash Proxy
The preservation of capital is paramount in a volatile market environment. TBIL’s investment in safe short term Canadian treasury bills minimizes the risk of principal loss. This makes TBIL an ideal investment for those who are looking to protect their cash reserves and still earn a rate of return.
Regardless of the current economic and market conditions, having TBIL in your portfolio offers exposure to a low-risk asset class. That reduces overall portfolio risk and volatility. This diversification adds balance and stability for your investment strategy.
Conclusion
The Harvest Canadian T-Bill ETF – TBIL – is as an effective cash proxy in the present-day market. TBIL offers stability, liquidity, and steady monthly income. Moreover, TBIL is low risk and productive investment vehicle for your cash reserves. Investors who are hungry for a dependable cash proxy should consider incorporating TBIL into their portfolio to help bolster financial stability and peace of mind in an uncertain time.
Disclaimer:
Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). Please read the relevant prospectus before investing. The funds are not guaranteed, their values change frequently, and past performance may not be repeated. The content of this article is to inform and educate and therefore should not be taken as investment, tax, or financial advice.
