The Best High-Yielding Canadian HISA ETFs for March 2025

Record-low interest rates kept high-interest savings accounts and high-interest savings ETFs on the Toronto Stock Exchange almost useless for the longest time.

Nobody wanted to park their hard-earned cash into a high interest savings account or a Canadian ETF yielding 0.5%, especially when the stock market was soaring.

However, the tables have indeed turned. Now, we’re presented with some of the best yields we’ve witnessed in decades. Investors finally have a place to park their hard-earned deposits other than the stock market.

In this article, we will go over some of the best high-interest savings ETFs you can buy today and earn monthly distributions or capital gains on your cash with relatively little risk.

Special note: upcoming changes

In October 2023, after consultation with both Canadian banks and these ETF providers, the Office of the Superintendent of Financial Institutions (OSFI) announced new guidelines for deposit-taking institutions regarding High-Interest Savings Account ETFs.

This will impact the yield paid by these ETFs, with banking analysts expecting the yields to fall about 10%. So, for example, a high-interest savings ETF that currently yields 5.3% would see its yield fall to the 4.7% to 4.8% range. 

Essentially, it came down to the security of the underlying banks. A high-interest savings ETF is considered a form of unsecured wholesale funding, which was viewed by the regulator as riskier than more secure sources, like retail deposits. 

It’s important to note these changes don’t affect the safety of these ETFs, which will continue to be a safe way for investors to collect an attractive yield on their cash. 

As it stands today, we don’t have concrete answers about where the yields on these accounts will end up since the new rules won’t be put in place until January 31st, 2024. But it’s coming, and investors will need to pay attention or get a nasty surprise when the yields do adjust lower. 

Overall, Horizons has cornered the high-interest savings account fund market

Horizons ETF management has the widest variety and the lowest fees out of any fund manager in Canada regarding HISA ETFs.

There are others that did not make this list, such as the Ninepoint High-Interest Savings Fund and the Evolve High-Interest Savings Account ETF. I don’t see any added benefit to including them on this list, as they bring nothing to the table that those here do.

These funds are a great way to take advantage of high rates and finally start to earn interest on your cash positions in volatile market conditions. Alternatively, I used these high-interest savings ETFs to make over $300 a month on my down payment while getting a house built in 2022.

There is risk here, however. But the chance of insolvency when it comes to Canadian banks, especially the major ones, is, in my opinion, next to none. There were a lot of fears in March and April of 2023, but they were short-lived.

Those with different investment objectives must decide whether they like the monthly distributions of something like PSA or CASH or would rather accumulate capital gains with funds like HSAV or HSUV.U.

Brokerage commissions are another thing you’ll have to consider. Although brokerage firms such as Wealthsimple Trade have free trades, buying in and out of these funds with your cash positions, if you’re paying commission, can quickly eat away at interest earned if you don’t have a lot of money in them.

Make sure to figure out your rate of return after all fees are paid and determine if these funds are worth your time.

A warning about these HISA ETFs

These HISA ETFs are generally available at most brokerages. However, many major banks, such as RBC Direct Investing, BMO Investorline, and TD Direct Investing, will not allow you to buy them at their brokerages.

Instead, you’ll have to buy their high-interest savings ETFs, money market funds, or mutual funds. From what I have witnessed, you can purchase these funds at banks like CIBC, National Bank, Canadian Western Bank, and Scotiabank, along with most discount brokerages.

The primary reason for this is that, for the most part, the money inside of these high-interest deposit accounts that these funds use is at these institutions.

The risks of these high-interest savings ETFs

High-interest savings ETFs here in Canada have virtually zero risk. However, they do have some, and I must highlight them.

Here in Canada, your deposits are typically protected by the Canada Deposit Insurance Corporation. I won’t go too in-depth on the CDIC in this article. But to sum it up quickly, any deposits under $100,000 at a CDIC-covered institution will be guaranteed if something happens to the bank.

An example would be if you took $90,000 and bought a cashable GIC at Toronto Dominion Bank. If TD Bank were to go insolvent, your $90,000 would be safe.

This is not the case with these HISA ETFs. I believe the chance of insolvency at the institutions holding these HISA ETF deposits is next to zero. But it’s not impossible.

Any investor needs to consider this before investing in these ETFs. These are relatively secure but not as safe as Canadian Government bonds, treasury bills, GICs, or other high-quality forms of fixed income.

How do these HISA ETFs provide such high yields?

Fund managers like Horizons, Purpose, CI Financial, and Evolve generally have access to institutional bank savings accounts. This means that typically, because of their extensive deposits, banks can give them higher rates than retail investors.

These fund managers have then turned around and distributed those higher interest rates back to investors in their savings ETFs.

As mentioned above, the controversial investing strategy has caused these funds to be banned from buying at particular brokerages like RBC, TD, and BMO.

But for now, investors can soak up some outstanding interest rates at rock-bottom fees.

Are high-interest savings ETFs worth the fees?

In short, they are. Fees on these ETFs range from 0.1% to 0.20%. However, this is a small price to access exceptionally high interest rates, virtually 100% liquidity, and little to no risk.

In the list above, I spoke individually on some of the management fees of each fund.

What is the difference between a HISA ETF and a GIC?

There will be two key differences between a HISA ETF and a GIC. For one, liquidity. GICs are not liquid at all. Typically, your money is locked in for a set amount of time. HISA ETFs can be bought and sold anytime the markets are open.

Because the underlying asset of the ETF is cash, they are also entirely liquid. And secondly, the CDIC insurance.

You are not insured via the CDIC if you buy a HISA ETF, whereas, with a GIC purchased from an institution that CDIC covers, it is insured up to $100,000.