🚀 Boost Your Savings with These Cash Alternative ETFs

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Hello ETF UNO readers! Get a cup of coffee and settle in because this weekend's reading is about making your money work smarter, not harder. If you've ever wondered whether your cash could be doing more than just sitting in a high-yield savings account, this is the read for you. Today, we're delving into the world of Cash Alternative ETFs. This article is part of our "QuickList" series, where we break down specific ETF categories to help you navigate the vast investing landscape.

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Why Consider Cash Alternatives?💰

Cash alternative ETFs are investment funds that aim to provide higher yields than traditional savings accounts while maintaining relatively low risk and high liquidity, typically by investing in short-term, high-quality debt securities.

Why cash alternatives might be a suitable replacement for your traditional high-yield savings account. Here are some compelling reasons:

• Potentially higher yields: In the current market environment, cash alternative ETFs often offer more attractive yields compared to traditional savings accounts.

• Liquidity: These ETFs typically provide daily liquidity, allowing you to access your funds when needed.

• Diversification: Cash alternative ETFs can offer exposure to a basket of short-term, high-quality securities, spreading risk across multiple instruments.

• Transparency: ETFs provide clear visibility into their holdings and performance, allowing investors to make informed decisions.

• Low minimum investments: Unlike some high-yield savings accounts that require substantial minimum balances, many ETFs can be purchased with relatively small amounts.

Before you start allocating your hard-earned cash to these ETFs, it's crucial to understand some key points. Remember, while these funds aim to preserve capital and provide income, they're not without risks. Here's what you need to know:

1. Not FDIC insured: Unlike bank savings accounts, FDIC insurance does not protect cash alternative ETFs. This means there's a possibility, however slight, of losing principal.

2. Interest rate sensitivity: While less sensitive than longer-term bonds, interest rate changes can still affect these ETFs. Existing bond prices tend to fall when rates rise, which could impact the ETF's value.

3. Expense ratios: Keep an eye on the fund's expense ratio. Even small differences can eat into your returns over time, especially in a low-yield environment.

4. Net Asset Value (NAV) fluctuations: While these ETFs aim for stable NAVs, there can be slight fluctuations. This is different from a savings account, where your principal stays constant.

🔝QuickList: Top Cash Alternative ETFs

1. PGIM Ultra Short Bond ETF (PULS)

Introduction: PULS seeks to generate current income while emphasising capital preservation and liquidity.

• Expense Ratio: 0.15%

• Provider: PGIM Investments

• Income Distribution Frequency: Monthly

• YTD Performance: 3.04%

2. NEOS Enhanced Income 1-3 Month T-Bill ETF (CSHI)

Introduction: CSHI invests in a portfolio of 1-3 month Treasury Bills and implementing a data-driven put option strategy

• Expense Ratio: 0.38%

• Provider: NEOS

• Income Distribution Frequency: Monthly

• YTD Performance: 3.12%

3. Invesco Ultra Short Duration ETF (GSY)

Introduction: GSY seeks to provide returns in excess of cash equivalents while also seeking to provide preservation of capital and daily liquidity.

• Expense Ratio: 0.20%

• Provider: Invesco

• Income Distribution Frequency: Monthly

• YTD Performance: 3.51%

4. SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)

Introduction: BIL aims to provide investment results that correspond to the performance of the Bloomberg 1-3 Month U.S. Treasury Bill Index.

• Expense Ratio: 0.14%

• Provider: State Street Global Advisors (SPDR)

• Income Distribution Frequency: Monthly

• YTD Performance: 3.05%

5. JPMorgan Ultra-Short Income ETF (JPST)

Introduction: JPST is an actively managed ultrashort bond ETF that aims to beat prime money market funds while limiting losses and maintaining liquidity.

• Expense Ratio: 0.18%

• Provider: J.P. Morgan

• Income Distribution Frequency: Monthly

• YTD Performance: 3.41%

6. iShares 0-3 Month Treasury Bond ETF (SGOV)

Introduction: SGOV aims to track the investment results of an index composed of U.S. Treasury bonds with remaining maturities less than or equal to three months.

• Expense Ratio: 0.09%

• Provider: BlackRock (iShares)

• Income Distribution Frequency: Monthly

• YTD Performance: 2.65%

🛣️The Cash Alternative ETF Landscape

As we've explored in this edition of QuickList, Cash Alternative ETFs present an intriguing option for investors seeking to optimise their cash holdings.

Remember the importance of researching and considering your risk tolerance before investing. We hope this QuickList has provided valuable insights to help you make informed decisions.

If you find this information helpful, we encourage you to join the ETF UNO community. This community is a valuable resource, providing expert insights sent directly to your inbox that can guide you in the vast and ever-evolving world of ETF investing, ensuring you stay ahead of the curve and make the most of your investments.

DISCLAIMER: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting with a financial advisor before making investment decisions.