Canadian Investors Can Still Earn Decent Yields Despite High Interest Rates

The Bank of Canada has held its policy interest rate at 2.25%, citing uncertainty around US tariffs, Canada's economic recovery, and inflation.

Canadian investors can still earn a reasonable yield on cash without taking much investment risk, thanks to high short-term interest rates.

Cash-equivalent ETFs can be a useful alternative to GICs (Guaranteed Investment Certificates) for managing idle cash. These funds pool investor money and provide access to institutional deposit rates, passing most of the interest back to unitholders.

One such fund is HISA (High Interest Savings Account Fund), which places its assets in high-interest deposit accounts at major Canadian financial institutions. With a 2.12% net annualised yield and a low 0.16% management expense ratio, HISA offers a relatively safe way to earn interest on idle cash.

Another option is the Global X 0-3 Month T-Bill ETF (CBIL), which invests in Government of Canada Treasury bills with remaining maturities of three months or less. This fund carries extremely low credit risk and very little interest-rate risk, making it a conservative choice for investors prioritizing capital preservation and liquidity.