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Holding cash in your investment account is a way of reducing stress about a stock market plunge, but it’s not a worry-free strategy.

You’ve got to find at least a semi-decent return on your cash, or your money is basically dead. T-bills are one option, but yields aren’t great for small investors. Money market funds have weak returns these days, and investment savings accounts (savings accounts that you buy and sell like a mutual fund) aren’t much better.

This brings us to high-interest savings ETFs, which seem to be developing a following.

The newest offering, CI First Asset High Interest Savings ETF (CSAV), has attracted $260-million since its debut in mid-June. The Purpose High Interest Savings ETF (PSA) has pulled in a little more than $2-billion since it was listed for trading in October, 2013.

The concept for the high-interest exchange-traded fund is this: offer a competitive savings rate by investing client money in a portfolio of savings accounts from major financial institutions. CSAV offers a net after-fee yield of about 2.1 per cent, similar to PSA. Investment savings accounts are in the 1.5-per-cent range, so there’s definitely a yield advantage to the ETF option.

There are two complications with high-interest savings ETFs, the first being that, as described here, some brokers don’t allow clients to buy and sell any cash-type investment product other than their own in-house version. Depending on the broker, if you tried to buy PSA, for example, your trade would be rejected.

The second issue with high-interest ETFs is that most brokers will charge you as much as $10 a buy-and-sell trade. Those costs will bite deeply into your interest gains if you have a small holding or trade frequently.

Questrade and Virtual Brokers have no buy commissions on ETFs, which remove half of the cost of using high-interest ETFs. National Bank Direct Investing waives ETF commissions entirely if you trade a minimum 100 shares. A simple commission-saving alternative for clients of all brokers is the mutual-fund version of CSAV, the CI High Interest Savings Fund.

The estimated management expense ratio for the fund is 0.3 per cent, which would bring down the net yield to about 2 per cent (the estimated MER for CSAV is about 0.2 per cent). Losing a bit of yield in exchange for no buy and sell commissions makes sense for investors who hold small amounts of cash and trade frequently.