3 Ways to Keep Your Cash Safe and Earning Monthly Income with Canadian ETFs

Unsurprisingly, the Bank of Canada held its policy interest rate at 2.25% at its latest meeting on September 2, citing increased uncertainty around U.S. tariffs, the sustainability of Canada's economic recovery and the inflation outlook. In other words, short-term interest rates remain high enough that Canadian investors can still earn a reasonable yield on cash without taking much investment risk.

For savers, the practical consequence is that the opportunity to earn decent interest on idle cash may stick around for a while longer, although future rate decisions will ultimately depend on inflation and economic conditions. You don't necessarily have to lock that money into a guaranteed investment certificate (GIC), either.

There are certainly compelling GIC and savings-account rates available, particularly from online institutions such as EQ Bank, and eligible deposits have the considerable advantage of Canada Deposit Insurance Corporation (CDIC) protection. The trade-off with a GIC is liquidity. Depending on the product, accessing your money before maturity can be difficult or impossible.

That's where cash-equivalent ETFs can be useful. Maybe you're maintaining a cash wedge in a retirement portfolio, building an emergency fund or waiting for an opportunity to deploy capital. An ETF can be bought or sold during normal market hours without committing your money for a fixed term.

There are some important qualifications. These ETFs are investments rather than insured deposits, so they don't come with the same CDIC protection. Their net asset values (NAVs) can also fluctuate rather than remaining fixed at $1 per unit like a conventional money market mutual fund. Still, depending on what they hold, cash-equivalent ETFs sit toward the lowest-risk end of the ETF spectrum.

The corresponding limitation is return. When the Bank of Canada's policy rate is 2.25%, there isn't much room to manufacture substantially higher yields without introducing additional credit, duration or other risks. For the most conservative products, investors should generally expect returns to track prevailing short-term rates, less the fund's expenses. That makes keeping fees low particularly important when every basis point represents a meaningful portion of the available yield.

With that in mind, I'm going to look at three Canadian ETFs that approach cash management using different underlying holdings. Each provides monthly income and daily liquidity, but the mechanics and risks differ enough that it's worth understanding exactly where your money is going.

HISA: High-Interest Savings Accounts

The interest rate advertised on your bank's savings account probably isn't particularly impressive. There are exceptions, including competitive rates from fintechs such as Wealthsimple and promotional offers elsewhere, but absent those, the average Big Five Canadian bank isn't necessarily paying retail depositors anything close to the Bank of Canada's policy rate.

Institutions, however, can negotiate much more competitive deposit rates. Better yet, an ETF provider can pool investors' money, access those institutional rates and pass most of the interest back to unitholders. That's essentially all the High Interest Savings Account Fund (HISA) from Evolve ETFs does.

HISA places its assets in high-interest deposit accounts at major Canadian financial institutions, including National Bank of Canada, Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce. After its 0.16% management expense ratio (MER), HISA offered a 2.12% net annualized yield as of September 4, 2026.

The mechanics are straightforward. HISA's net asset value (NAV) generally begins around $50 following its monthly distribution and gradually creeps higher as interest accrues. When the ETF goes ex-distribution, its NAV adjusts downward by approximately the amount of the distribution, which is subsequently paid to investors.

That makes HISA one of the lowest-risk types of ETFs available, although an important distinction remains: owning HISA units does not give you CDIC insurance on the underlying deposits. There is still some counterparty and fund-structure risk, however small it may be.

CBIL: Government of Canada Treasury Bills

What else sits toward the conservative end of the spectrum? Debt issued directly by the Government of Canada. When the federal government needs to borrow money, it issues debt securities with different maturities. The shortest are Treasury bills, or T-bills, which mature in one year or less. Rather than paying a conventional coupon, T-bills are generally issued at a discount and mature at their face value, with the difference representing the investor's return.

The Global X 0-3 Month T-Bill ETF (CBIL) concentrates at the very shortest end of that market, maintaining exposure to Government of Canada T-bills with remaining maturities of three months or less. Government of Canada debt carries top-tier credit ratings, so credit risk is extremely low. CBIL still isn't an insured or guaranteed deposit like an eligible GIC, but its principal risk would ultimately require a deterioration in the creditworthiness of the federal government.

Because these T-bills mature so quickly, CBIL also carries very little interest-rate risk. Its yield should adjust relatively quickly as prevailing short-term interest rates change. If the Bank of Canada eventually cuts rates, investors should expect CBIL's yield to decline. If short-term rates increase, its yield should move higher as the portfolio rolls into newly issued T-bills.

After its 0.11% MER, CBIL offered an annualized yield of approximately 2.15% as of September 4, 2026, with distributions paid monthly. Its NAV follows a familiar pattern as well. CBIL trades around $50 per unit, gradually accumulating income between distributions before adjusting downward when that income goes ex-distribution. For investors primarily concerned with capital preservation and liquidity, it is about as uncomplicated as fixed income gets.

ZMMK: Taking Slightly More Credit Risk

If you're willing to accept somewhat more credit risk in exchange for a modest yield pickup, you can move beyond bank deposits and federal T-bills. That's where the BMO Money Market Fund (ZMMK) comes in. ZMMK can invest across a broader collection of short-term debt instruments, including government securities as well as commercial paper and bankers' acceptances.

Commercial paper is short-term unsecured debt issued by corporations to finance working capital and other immediate funding requirements. Bankers' acceptances are instruments whose payment is effectively backed by a bank, making them an important source of short-term corporate financing.

Maturity remains tightly controlled. Securities mature within 365 days, while the portfolio maintains an average term to maturity of less than 90 days. Keeping maturities short limits sensitivity to changing interest rates while allowing the portfolio to continually reinvest at prevailing money-market yields.

Credit quality is also high. Roughly half of the portfolio is currently rated A-1+, with most of the remainder rated A-1. These are short-term credit ratings indicating issuers judged to have strong capacity to meet their financial obligations, with A-1+ representing the stronger designation within that category.

ZMMK consequently takes somewhat more credit risk than CBIL, since a corporation or financial institution doesn't have the same credit profile as the Government of Canada. Its NAV can also experience incrementally more fluctuation. But that additional risk is compensated. As of September 4, 2026, ZMMK offered an annualized yield of 2.41% after its 0.13% MER, with distributions paid monthly.