Rob Carrick’s Tip
Getting a decent yield on the cash in a brokerage account is a hassle. Most money market accounts charge a MER of 0.9% and transferring money to a high-interest savings account is not practical for funds held inside a RRSP.
Rob Carrick, personal finance columnist for the Globe and Mail, offers an excellent tip for the cash portion of your portfolio: The Altamira CashPerformer (AIS100). The CashPerformer offers a current yield of 3.75% and can be purchased through your discount broker (I checked with RBC ActionDirect). Here are the key features:
- CashPerformer is just like a high-interest savings account. It is insured by CDIC, up to a maximum of $100,000.
- Interest is calculated on daily balances and paid monthly.
- There is no minimum limit but discount brokers impose a limit. Action Direct, for instance, imposes a minimum initial investment of $1,000 and subsequent minimum additions of $500.
Altamira also offers a US Dollar CashPerformer (AIS101) that pays a rate of 4.5%. There is no CDIC coverage and I am not sure if any protection is available.
Update: The overwhelming consensus in the comments seems to be that AIS100 might not be an ideal choice for parking your cash at discount brokers because of redemption fees and penalties. I checked with RBC Direct Investing and they charge a 1% Early Redemption fee if this fund is sold within 120 days.