Options for Parking Cash with Capital Preservation in 2025

In the current economic environment, characterized by fluctuating interest rates and market volatility, investors frequently seek secure methods to allocate idle cash. Parking cash emphasizes capital preservation, liquidity, and modest returns through interest or dividends, making it suitable for short-term holdings, emergency reserves, or periods of market uncertainty. As of July 22, 2025, with central banks adjusting policies amid ongoing recovery efforts, options such as high-interest savings ETFs, treasury bond ETFs, and mutual funds from major Canadian banks offer viable strategies. These instruments typically feature low risk and high accessibility, though they may not fully hedge against inflation over extended periods. This article examines key alternatives, including CASH.TO, SGOV, and RBC's RBF2010 and RBF2014, providing an overview of their features, yields, risks, and considerations.

High-Interest Savings ETFs: A Practical Canadian Solution

High-interest savings ETFs represent an efficient option for Canadian investors, combining the benefits of savings accounts with exchange-traded liquidity. The Global X High Interest Savings ETF (CASH.TO) invests in high-interest deposit accounts at major Canadian banks, such as National Bank, Scotiabank, and CIBC, with the goal of delivering monthly income while maintaining capital stability and liquidity.

As of July 21, 2025, CASH.TO provides an annualized distribution yield of 2.55%, a gross yield of 2.63%, and a 12-month trailing yield of 3.31%. Its management expense ratio (MER) stands at 0.11%, ensuring cost efficiency. Historical performance includes a one-year return of 3.37% and a three-year annualized return of 4.25%. The fund is classified as low risk, with negligible volatility, though it lacks Canada Deposit Insurance Corporation (CDIC) coverage. Advantages include daily tradability and tax efficiency in registered accounts, such as RRSPs or TFSAs. However, yields may decline in a falling rate environment, and distributions are taxable in non-registered portfolios.

Comparable options include the Purpose High Interest Savings ETF (PSA), with a net yield of 2.65%, and the BMO Money Market Fund ETF (ZMMK), offering an annualized yield of 3.61%. These alternatives provide similar capital preservation but may vary in fees and underlying holdings.

Treasury Bond ETFs: Secure U.S. Government-Backed Instruments

For investors seeking exposure to U.S. assets, the iShares 0-3 Month Treasury Bond ETF (SGOV) offers a highly secure alternative, tracking short-term U.S. Treasury bills with maturities under three months. This ultra-short duration mitigates interest rate sensitivity, prioritizing principal protection and consistent income.

As of July 18, 2025, SGOV's 30-day SEC yield is 4.22%, with a 12-month trailing yield of 4.53% and an average yield to maturity of 4.30%. The expense ratio is 0.09%, and monthly distributions enhance its appeal. Performance metrics show a one-year return of 4.71% and a three-year annualized return of 4.65%, supported by a low three-year standard deviation of 0.30%. With net assets exceeding $51 billion, the ETF ensures high liquidity. Backed by the U.S. government, it presents minimal credit risk, though Canadian investors should account for currency exchange fluctuations and potential withholding taxes.

This option is particularly suitable for those holding U.S. dollars, providing diversification benefits. A key limitation is its sensitivity to Federal Reserve rate decisions, which could reduce yields if further cuts occur.

Mutual Funds from Major Canadian Banks: RBC's Structured Offerings

Major Canadian financial institutions offer mutual fund products designed for cash management, often resembling high-interest savings accounts with added convenience. The RBC Investment Savings Account Series A (RBF2010) targets Canadian dollar holdings, focusing on current income and liquidity through short-term money market instruments.

Current data indicates an interest rate of approximately 2.30%, accrued daily and distributed monthly. The U.S. dollar counterpart, RBF2014 (RBC U.S. Investment Savings Account Series A), offers a rate of 3.90% as of March 13, 2025, reflecting prevailing U.S. market conditions. These funds incur no explicit management fees and allow daily redemptions without volatility exposure. While not CDIC-insured, they benefit from RBC's institutional stability.

Benefits include seamless integration within RBC's banking platforms and suitability for registered plans. Potential drawbacks encompass variable rates subject to change and potentially lower yields compared to ETFs during elevated rate periods. Similar products from other banks, such as TD's TDB8150, provide additional choices for diversification.

Additional Considerations and Alternatives

Investors may also explore Guaranteed Investment Certificates (GICs), which offer fixed short-term rates of 3-4% with principal guarantees; direct purchases of Treasury bills; or traditional high-interest savings accounts (HISAs) yielding 2-3% with CDIC protection up to $100,000. Money market funds, blending short-term bonds and cash equivalents, typically deliver around 3% returns.

Key factors to evaluate include taxation—interest income is fully taxable outside registered accounts—and inflation risks, which could diminish real purchasing power. Portfolio alignment with currency preferences, risk tolerance, and investment horizons is essential.

In summary, CASH.TO delivers competitive Canadian dollar yields with ETF flexibility, SGOV provides robust U.S. treasury security, and RBC's RBF2010 and RBF2014 offer bank-integrated simplicity. These options support effective capital preservation in 2025's dynamic landscape. Professional financial advice is recommended to customize selections based on individual circumstances.