Money Market Funds to Invest In
Choosing the money market funds to invest in can take time and effort. There are plenty out there, and while they are considered lower-risk investments, there is still some risk involved. To reduce the risk of losing your money, it’s important to do some research before you start investing.
Depending on where you choose to invest, there is plenty of different data available to help you make the most informed decisions. You can also speak with an investment broker or a financial advisor. No matter what you choose to invest in, though, there’s never a 100% guarantee. With all that in mind, though, let’s take a look at some of the best money market funds on the market.
While many of these are high-interest savings account ETFs, here’s a list that doesn’t include what is considered to be the best high-interest savings account ETF: Horizons Cash Maximizer ETF. Not many of these, if any, are equity ETFs.
CI High-Interest Savings ETF
This type of money market fund is an Exchange Traded Fund. This ETF seeks high yields on cash balances, is a short-term liquid investment and is low-risk. Specifically, this account tracks high-interest savings accounts. It’s listed on the Toronto Stock Exchange (TSE) and offers monthly income distributions. It’s one of many cash ETFs.
The CI High-Interest Savings ETF has been around since 2019. It has a MER of 0.15% and is eligible for registered accounts. The total net assets of this fund are 4.51 billion, and its yield is 2.16%. It’s a popular option for fixed-income ETFs.
Evolve High-Interest Savings ETF
The Evolve High-Interest Savings ETF is a low-risk fund that offers monthly distributions. Like most other ETFs, it offers a liquid short-term investment. The purpose of this fund is to seek exposure to high-interest savings accounts.
Like many other money market funds, this fund is available for registered accounts. The assets under management are 2.605 billion, and the net yield is currently 2.11%.
Purpose Money Market Fund Series F
The Purpose Money Market Fund Series F is popular among Canadian investors because it offers monthly distributions, daily liquidity, low minimum balances and no lock-up periods. It offers the ability to maximize potential with high-interest rates. With that in mind, there are only a few deposit holders for this money market fund. These include:
- National Bank of Canada
- Bank of Nova Scotia
- Bank of Montreal
- Canadian Imperial Bank of Commerce
This fund has been around since February 2016, and the fund’s management fee is 0.20%, with a net yield of 1.30%. The total assets under management are 53.2 million.
Manulife Money Market Fund F
The Manulife Money Market Fund F invests primarily in Canadian money market instruments. By doing this, it seeks to provide interest income while preserving capital. That said, this is a newer fund, having been around since 2012.
This money market fund has 151.30 million in assets under management and has a monthly distribution frequency. It has a distribution yield of 1.91% with a MER of 0.53%. The management fees are 0.42%. The minimum initial investment for this fund is $500, with a subsequent investment of $25. The risk assessment on the Manulife fund is low.
BMO Money Market Fund
The BMO Money Market Fund is a good option for those seeking a low-risk, secure investment. It’s also good for those looking for a short-term investment. The fund invests primarily in money market instruments issued by Canadian governments and corporations.
The total net asset value of this fund is 7,019.6 million, and its MER is 0.35%. The minimum investment amount is $500, with a $50 minimum for initial investments. It offers a monthly distribution frequency and a yield of 2.28%.
Global X High Interest Savings ETF
The Horizons High Interest Savings ETF, also known as the Global X High Interest Savings ETF, has an inception date of November 1, 2021. This particular fund invests almost all of its assets in high-interest deposit accounts with one or more Canadian chartered banks. It’s also designed to provide a consistent monthly income.
Regarding the specifics of this fund, the total Net Assets are $6,531,252,482, and the MER is 0.11%. The management fee is 0.10%, and the annualized distribution yield is 2.40%. The gross yield is 2.16%.
Ninepoint Cash Management Fund
The Ninepoint High Interest Savings Fund, now known as the Ninepoint Cash Management Fund, has an inception date of August 8, 2020. There’s no penalty for redemption, and you have access to daily liquidity. Unlike other funds, this is intended as a short-term, not a long-term, investment.
The distributions with this account are monthly, and the minimum investment amount is $500. The management fee is 0.14%, and the annualized yield rate is 2.49%. The current yield rate is 2.46%.
Horizons 0–3 Month T-Bill ETF
The Horizons 0-3 Month T-Bill ETF, also known as the Global X 0-3 Month T-Bill ETF, is another great money market fund. It has a lower risk than other funds because it invests in the short-term Government of Canada T-Bills.
This fund has an inception date of April 12, 2023 and has net assets of $2,633,475,729. The MER for this fund is 0.11%, and the management fee is 0.10%. The 12-month trailing yield is 2.25%, and the annualized distribution yield is 2.50%.
iShares Premium Money Market ETF
The objective of this particular fund is to provide current income, capital preservation and liquidity. It gives you exposure to high-quality short-term debt securities. It’s also an older fund, having been around since February 18, 2008.
The net assets of this fund are 2.7 B, with a monthly distribution frequency. The management fee is 0.12%, and the MER is 0.13%. The average annual yield is 2.43%, and the 12-month trailing yield is 2.41%.
Purpose High Interest Savings ETF
This is another money market fund that focuses on low-risk investments. It does this by focusing on high-interest deposits with Schedule 1 banks and Bank of Canada T-Bills. This fund also offers premium monthly interest rates.
This fund has a management fee of 0.15% and over 4.2 billion in assets under management. Its gross yield is 2.36%, and its net yield is 2.19%.
Best USD Money Market Fund in Canada in 2026
While many money market funds in Canada are Canadian, some are in USD. Currently, the fund below is considered one of the best USD money market funds.
Horizons USD Cash Maximizer ETF
The Horizons Cash Maximizer ETF, also referred to as the Global X USD Cash Maximizer ETF, is a fund that invests all of its assets in U.S. dollar high-interest accounts. It does this with Canadian chartered banks because they offer a higher interest rate.
The inception date of this account is June 30, 2020, and its net assets are $773,374,215. The MER is 0.20%, and the management fee is 0.18%. The gross yield is 3.32%.
Yield Comparison of Canadian Money Market Funds
Depending on the money market fund you invest in, the monthly and annual yields will differ. It’s also important to note that yield percentages will change frequently, as the stock market can be volatile. With that in mind, though, let’s take a look at the current yield rates.
| Money Market Fund | Yield |
| Global X High Interest Savings ETF | 2.16% |
| Evolve High-Interest Savings ETF | 2.11% |
| Purpose Money Market Fund Series F | 1.30% |
| CI High-Interest Savings ETF | 2.16% |
| Ninepoint High Interest Savings Fund | 2.46% |
| Purpose High Interest Savings ETF | 2.19% |
| iShares Premium Money Market ETF | 2.43%. |
| Manulife Money Market Fund F | 1.91% |
| Horizons 0–3 Month T-Bill ETF | 2.50% |
| BMO Money Market Fund ETF | 2.28% |
The Safety of Canadian Money Market Products
When it comes to the safety of your funds, money market funds are considered to be safe investments. Your principal and return are usually guaranteed, but unlike other investments, your funds aren’t protected by the CDIC.
The CDIC, also known as the Canada Deposit Insurance Corporation, is the depositor insurance in Canada that covers funds held at Canadian banks. They cover up to $100,000 in the case of a bank failure. That said, they don’t cover all securities held at Canadian banks.
This is something to consider when it comes to money market funds. That said, these funds are secure in other ways, as they are mechanisms for governments and corporations to raise capital. As long as you hold these accounts to maturity, then you’ll receive your guaranteed return.
They also remain liquid, so you have access to your funds at any time. Essentially, these funds are sold at a discount and then purchased at the full price. Let’s take a look at some examples of money market products.
- Money Market ETFs
- Money Market Mutual Fund investments
- Treasury Bills
- Bonds
- Commercial paper
- GICs
- Securities lending and repurchase agreements
The Canadian Equivalent to Money Market Accounts
What exactly are Money Market Accounts? Well, they’re interest-earning accounts that are offered at financial institutions that earn a higher rate than a traditional savings account. Sometimes, the rates are higher than high-interest savings accounts, and sometimes, they’re not.
Depending on the type of money market account that you get, you can use a debit card or write cheques from that account. However, these types of accounts aren’t meant for long-term use, but they are great for short-term savings.
While we don’t have money market accounts, we do have some alternatives. The accounts that are most similar to money market accounts are high-interest savings accounts and GICs. That said, these accounts do differ a bit. When you look to invest in them, though, you can do so with your current government deposit insurer or other government deposit insurers.
High-Interest Savings Accounts
High-interest savings accounts are bank accounts that allow you access to your bank deposits at any time while earning interest higher than your traditional savings account. Many Canadians prefer these accounts because they have no fees, no minimum deposit requirements, and no risk of market volatility.
GICS
GICs, also known as Guaranteed Investment Certificates, are accounts offered by banks, credit unions and trust companies. With GICs, your initial investment is guaranteed, and your interest is earned until maturity. Depending on the type of GIC you invest in, you may be able to access your funds before they mature, or there may be a penalty if you access them before maturity.
Just like money market accounts, GICs are low-risk accounts, and in the event of a bank failure, amounts up to $100,000 are insured. That said, GICs aren’t for everyone. Depending on when you get your GIC, you may earn less or more interest. Often, GICs earn less than other investment options, but they’re a secure way for those looking to invest in the short term. The reason that you don’t always make as much with GICs is because of the interest rate risk.
Once you lock into a GIC, there are no interest rate movements. Even in the event of rising interest rates, your rate won’t change until it reaches maturity. This is one of the reasons that some investors tend to avoid GICs. That said, GICs are very low risk and can almost be considered risk-free. Unless you access the GIC before maturity, there’s no chance that you’ll lose money.
Highest Money Market Rates in Canada
In Canada, money market accounts are referred to as high-interest savings accounts. These accounts have higher-than-normal interest rates. However, they vary based on the prime rate in Canada. Currently, the highest rate is around 4.70%. This is with the RBC High-Interest e-savings account.
Should Money Market Funds be Held in a TFSA?
In Canada, money market funds can be invested as RRSP contributions, RESP savings, FHSA holdings, TFSA savings, and in non-registered taxable accounts. That said, investing your money in TFSA money market funds affects your interest income tax treatment.
Interest earned in a TFSA is non-taxable, so you won’t have to pay your marginal tax rate on the funds you earn. Before you invest in a TFSA, though, you need to consider your contribution room as well as your TFSA account placement, since all brokerages work a little differently.
How are Money Market Funds Taxed?
Money market funds that are held in taxable accounts are taxed on their interest income. Your income taxes payable are determined by your marginal tax rate. These funds are paid out as regular interest income and have to be reported on your income tax return every year. They have to be reported even if they’ve been reinvested. The exact amount you need to report will be shown on your T5 slip.
Using Money Market Funds for Emergency Savings
The simple answer is, yes, you can. Money market funds are low-risk and highly liquid, making them the perfect account for parking emergency funds. They offer higher returns than your standard chequing or savings account, keep pace with inflation while remaining secure, and provide access to cash flow. It’s not really recommended for a down payment, given your down payment timeline and the ability to save more tax with an FHSA.
That said, there are some downsides to consider. The first is that it can take 1 to 2 business days (T+1 settlement) for your funds to be available in cash. You also need to consider that you’re unable to liquidate funds on weekends. They also aren’t insured by the CDIC, unlike funds held in a bank account.
How Do Money Market Funds Differ from a Bond ETF?
When you’re considering both money market funds and bond ETFs, it’s important to look at the bond ETF comparison.
- Money market funds purchase securities that mature within a year, whereas bond ETFs hold long-term bonds that can take years to decades to mature.
- Money market funds are more stable. They have NAVs that stay around $1 per share, and bond ETF prices continuously rise and fall. When NAVs for money market funds drop below $1, it’s called breaking the buck, and it’s not very common.
- Money market funds are considered to be low-risk and cash equivalents. Bond ETFs are more volatile and can drop in value.
- Money market funds are considered to be better for short-term and emergency savings. Bond ETFs are a better fit for long-term goals and to diversify portfolios.
- Money market funds have a low tracking error, whereas bond ETFs have a higher tracking error risk.
Protection if a Brokerage Fails
While your funds aren’t protected by the CDIC, money market funds are covered with CIPF protection due to CIRP oversight, which covers your counterparty risk. The coverages will protect up to $1 million per general account category if a brokerage goes under. However, the brokerage you work with must be a member of the Canadian Investment Regulatory Organization.
Purchasing Money Market Funds at Any Brokerage
While you can’t purchase money market funds at just any brokerage, there are many where you can purchase them or an equivalent. These brokerages include:
- Questrade
- QTrade
- TD Direct Investing
- EQ Bank
- Wealthsimple Cash
Brokerage commissions, advisory fees, and ECN fees can vary by brokerage. Different transactions will also incur different fees. You need to consider foreign withholding taxes, especially for US Treasury ETFs and other transactions in foreign currencies.
When you’re choosing a brokerage, you should look at the other types of investments that they offer, including DRIPs (Distribution Reinvestment Plans) and ultra-short bond ETFs. In terms of money market funds, you should look at the:
- Holding company investments
- Fund facts documents
- Simplified prospectus
- Corporate cash management data
What is the Reinvestment Risk When Rates Keep Falling?
When you’re investing, whether or not you’re using the GIC laddering strategy, the reinvestment risk is real. When you initially invest in a GIC, the yield to maturity percentage does not change, and your real return after inflation is the same. However, if the savings account promotional rate when you reinvest is less than your initial rate, then you could be earning less, which is your reinvestment risk.
Your reinvestment risk is different from an early redemption fee, which will reduce your interest and charge a fee if you pull out your investment early. However, if you transfer between brokerages, you can avoid that fee. No matter what brokerage you invested in, though, your weighted average maturity doesn’t change, and you still hold the same reinvestment risk.
USD Funds and Currency Conversion Costs
To avoid currency conversion costs, you can use existing US funds to purchase US financial assets. If you don’t have any, then using Norverts Gambit is a good way to avoid any foreign exchange fees as well.
