The Best Money Market Funds in Canada

InIn Canada, money market funds are ETFs and mutual funds that invest in cash and cash securities. While not all money market funds are short-term debt securities, a good portion of them are. The reason that investors choose money market funds to diversify their portfolios is because they offer stability, high yields and liquidity.

That said, you do have to be careful about which money market funds you choose to invest in. Let’s take a look at some of the best options available right now. 

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 to be lower-risk investments, there is some risk involved. In order 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 always speak with an investment broker or a financial advisor as well. 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 found on the TSE (Toronto Stock Exchange), and it offers monthly income distributions. It’s one of many cash ETFs. 

The CI High-Interest Savings EFT 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 $6.12 billion, and it has a net yield of 2.54% and a gross yield of 2.69%. 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 $3.17 billion, and the net yield is currently 2.57%.

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 1.73%. The total assets under management are $101.9 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 that has only been around since 2012. 

This money market fund has $203.24 million in assets under management and has a monthly distribution frequency. It has a distribution yield of 3.71% with a MER of 0.48%. 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 idea for those looking for a low-risk and secure investment. It’s also good for those looking for a short-term investment. The fund invests primarily in money market instruments that are issued by Canadian governments and corporations. 

The total net asset value of this fund is $5,723.2 million, and it has an MER of 0.69%. The minimum investment amount is $500, with a $50 minimum for initial investments. It offers a monthly distribution frequency and a yield of 2.60%. 

Horizons 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. 

When it comes to the specifics of this fund, the total Net Assets are $6,672,325,971 and MER is 0.11%. The management fee is 0.10% and it has an annualized distribution yield of 2.52%. The gross yield is 2.63%.

Ninepoint High Interest Savings 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 to be a short-term investment, 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 3.43%. The current yield rate is 2.87%.

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 $1,765,068,339. The MER for this fund is 0.11% and the management fee is 0.10%. The 12 month trailing yield is 3.69% and the annualized distribution yield is 2.64%.

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 since it’s been around since February 18, 2008. 

The net assets of this fund are $1,995,578,314 and have a monthly distribution frequency. The management fee is 0.12%, and the MER is 0.13%. The average annual yield is 1.36% and the 12-month trailing yield is 3.97%.

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 interest rates that are paid out monthly. 

This fund has a management fee of 0.15% and over $4.16 billion in assets under management. Its gross yield is 2.78%, and its net yield is 2.61%.

Best USD Money Market Fund in Canada

While many of the money market funds in Canada are in Canadian funds, some of them are in USD. Currently, the fund below is considered to be one of the best money market funds in USD 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 US 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 it has net assets of $749,022,031. The MER is 0.20% and the management fee is 0.18%. The gross yield is 4.10%.

Yield Comparison of Canadian Money Market Funds

Depending on the money market fund that you invest in, the monthly and annual yields are going to be different. It’s also important to note that the yield percentages are going to change frequently since the stock market can be volatile. With that in mind, though, let’s take a look at the current yield rates. 

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 referred to as the Canada Deposit Insurance Corporation, is the depositor's 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 because they are ways 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 discounted rate and then purchased at the full rate. 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 there are no fees, no minimum deposit amounts, and no risk of market volatility. 

GICS

GICs, also known as Guaranteed Investment Certificates, are accounts that banks, credit unions and trust companies offer. With GICs, your initial investment amount is guaranteed, and your interest is earned as long as your investment reaches 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 be earning less or more interest. Often, GICs earn less than other forms of investments, but they’re a secure way for those who are 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. 

Money Market Funds and Taxes

Just like with all money you earn in Canada, there are taxes payable on money market funds. These income taxes need to be paid on dividend income as well as capital gains distributions. The only difference is the amount of taxes payable, since these amounts are calculated differently.

Effectively Investing in Money Market Funds

No matter what kind of investing you’re looking at getting into, it can be difficult to determine which investment is the best for you. The first thing you need to consider is trading strategies such as capital preservation, and other popular strategies. 

After you’ve figured that out, you need to figure out the specifics of the particular investment. To do this, you want to look at things like:

• Past performance
• Account sales
• Unit Values
• The annualized historical yield based on historical performance
• Actual expenses
• Detailed investment information
• Performance data 
• Risk tolerance
• Top ten holdings
• Market conditions
• Trailing commissions
• Inception month and year
• Effective yield, both net and gross
• Indicated rates
• Yield after seven day period ended

Once you’ve evaluated relative information on an annualized basis, as well as those that are more short-term, you can narrow down your search. Many funds provide financial information through interactive charts, such as bar charts for illustrative purposes. Many of these also reflect future values. The charts include axis displaying values as well as axis displaying categories. 

With values changing frequently, authorized dealers are constantly updating their fund facts. Even if at this point it’s a hypothetical investment, you also need to consider the down payment amount as well as how much you can afford. While many of these funds maintain liquidity, the amount you have isn’t a constant amount. 

If you’re still unsure after you’ve completed your research, you can always turn to a financial advisor for investment advice. They can help guide you in the right direction based on your finances as well as your goals. 

Overview

Investing in the market can be overwhelming, but there are plenty of ways to invest. One of these ways is with money market funds, more commonly known as EFTs and mutual funds. While many Canadians use these funds as ways to save for retirement, they’re also a good way to save money for the short term.

Depending on the type of MMF that you choose, you could also use it as a way to earn investment income. Depending on the money market fund you invest in, they may not be taxed as interest income, though they could be considered capital gains. 

Money market funds, also referred to as fixed-income assets, are a common way for investors to diversify their portfolio while earning investment income. Because these types of funds are also low-risk, they’re a bit more popular.

That said, low risk doesn’t mean no risk. Deciding where to invest your money can still be difficult. If you’re unsure, you can always speak to a financial advisor who can help guide you in the right direction based on your long- and short-term financial goals.

You can even open a brokerage account with an investment firm if you don’t feel comfortable investing yourself.  Investing has many risks, including corporate debt and counterparty risk, so getting a second opinion isn’t always a bad idea.