Finadium: Can ETFs Replace Cash Accounts?

A new research report from Finadium looks at the range of ultra short ETFs, some of which are competing with traditional cash accounts for investor interest. This report should be read by investors, buy-side firms, and cash managers looking to understand how the ETF product set may fit into the market, including pros and cons to their use as immediate alternatives to government and prime funds.

Although ETFs with ultra short and US Treasury investments have been in existence since 2009, more recent funds that offer same day liquidity and the possibility of collateral access for OTC derivatives may generate new interest from investors over the next year or two. There may also be opportunities for some ETFs to participate in Direct, Peer to Peer, and All to All markets, or to join CCPs as buy-side members. By accessing inventory and promising access to ready cash, a new product combination to these short-term ETF investments is worth considering.

Ultra short ETFs range from under three month to over a year: the long end is too long for most cash investors, while the short end can be more conservative than a prime money fund. There is a balance and a market if ETF providers can figure out the optimal mix of how investors want to use these products. Already ETF managers are experimenting with alternatives.

This report is part of the Investor Focus series, the Securities Finance, Collateral and Derivatives series and the Fixed Income series. These research subscribers can log in here to access this report. All others may visit the Finadium reports website for report details.

Related Posts

Previous Post
EBA launches consultation on significant risk transfer in securitization
Next Post
Fed announces beginning of tapering, balance sheet normalization

Fill out this field
Fill out this field
Please enter a valid email address.

X

Reset password

Create an account