Current Yield: 4.90% per year
Update Feb 22, 2024
The High Interest Savings Portfolio is generally suitable for short-term savings, and can be a good alternative to keeping cash in a bank account that earns little to no interest. But that doesn't mean it is the same as a savings account at a bank or credit union.
The ModernAdvisor High Interest Savings Portfolios (HISP) invest in the Purpose High Interest Savings Fund (PSA) which is an ETF that trades on the Toronto Stock Exchange. Since it trades on the stock exchange it's price fluctuates from day to day and it can go down as well as up; but over the month the price increases as the interest accrues. On the ex-distribution date the price resets to 50.00; the distribution of the interest is generally paid 5 business days after that. There will be a drop in the value of the client account between the ex-distribution and the distribution payment date of the ETF.
Below is a 1 year chart of its performance showing the increase in the price during the month as interest is accrued and then drops as the distribution is made.
Since the HISP invests in a publicly traded security it is subject to a trade settlement period. PSA has a T+1 trade settlement (unlike stocks and most ETFs that are T+2) which means if you sell it on a Tuesday, the cash is available to withdraw from your account on Wednesday.
What does PSA invest in?
PSA maintains deposits at Canadian Schedule 1 banks (think CIBC, TD, Scotiabank, National Bank) that pay interest. The interest rates paid on these accounts fluctuate with the Bank of Canada's benchmark interest rate.
What is the Current Yield of the High Interest Savings Portfolios?
The annual yield on the High Interest Savings portfolios, before ModernAdvisor and financial planning fees, is 4.90% per year as of January 31, 2024.
What are ModernAdvisor Fees on the High Interest Savings Portfolios?
ModernAdvisor management fees are 0.20% per year + GST or HST, depending on the client's province of residence. A minimum management fee of $2.5/month applies to RESP accounts, while a $5/month fee applies to non-RESP accounts. The per-account minimum fee is waived if the management fees on other client accounts exceed the minimum fee.
Are there any other fees on the HISP?
A Service Fee of up to 0.2% + GST or HST, depending on the client's province of residence, can be charged by the referring financial planner or advisor.
What accounts can use it?
All account types offered by ModernAdvisor can select the ModernAdvisor High Interest Savings portfolio. These include non-registered, TFSA, RRSP, RESP, RDSPs, RIF, LIF, LIRA, and corporate accounts.
There are no fees to withdraw funds from the High Interest Savings Portfolios. However, a de-registration fee may apply to withdrawals from certain registered accounts.
Contribution and Withdrawal Limits
There are no contribution and withdrawal limits specific to the High Interest Savings Portfolios. Account specific limits apply regardless of the investment option selected inside the account.