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Is It Time To Buy The BetaShares AAA ETF?

Should you be holding your term deposit cash in the BetaShares Australian High-Interest Cash (ASX: AAA) ETF?

Why People Buy Into AAA

There are quite a few reasons why some Aussies might think the Australian High-Interest Cash ETF could be a better option than sticking your cash in a simple savings account.

Firstly, the interest rates earned are higher than what you’d get with most savings accounts or term deposits. The 12-month distribution yield to 30th June 2019 was 2.0% and the current interest rate earned on the fund’s bank deposits is 1.51% after management costs.

AAA invests in a number of deposit accounts across National Australia Bank Ltd (ASX: NAB), Bankwest, which is owned by Commonwealth Bank of Australia (ASX: CBA) and ME Bank, an online-only bank.

The main benefit of this ETF versus a term deposit is that the ETF provides greater flexibility for essentially the same interest rate. Taking your money out of a term deposit early can mean losing all interest, whereas the AAA ETF can be bought and sold like shares and pays a monthly distribution.

AAA – The Negatives

Like all ETFs, the AAA ETF comes with management fees – in this case, 0.18% per year. While this is a low fee compared to most other ETFs, the fee is quite high as a percentage of the interest earned.

If you’re going to invest in this ETF, know that it’s not going to return you anything exciting, it’s simply a diversification strategy with a better interest rate than a bank account. I’d have to say this ETF doesn’t seem like the best option, although I’d take it over a term deposit.

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

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From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

CLICK HERE TO GET THE REPORT

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