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Invest your cash.
Track 5.3%*
Try Cash Investments: high-yield, low-risk ETFs.
Now on Freetrade.
Capital at risk. Always do your own research.
*Based on the fed funds rate as at 16/11/2023.
Now on Freetrade
Cash Investments
The place to park your cash
Freetrade’s Cash Investments are a collection of high-yield, low-risk ETFs. They track or try to outperform overnight rates, like the fed funds rate or Sterling Overnight Index Average (SONIA), or invest in ultrashort investment grade bonds.
High rates: Better rates than your bank.
Low risk: Keep your cash, with low volatility.
Easy access: Buy and sell them whenever you want. No minimum term.
Average easy access savings rate Sep'23 vs fed funds rate, Nov'23
Better rates than your bank
Interest rates are at a 15-year high.
So why settle for less than 3% from your bank?**
Sure, you can get a bit more if you get a 1 or 2 year fixed, but Cash Investments offer high yields without tying up your cash for a minimum term.
You can pick a Cash Investment that tracks one of the following overnight rates (as at 16/11/2023):
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Remember, overnight rates fluctuate daily, so the rate you receive may fall. You’ll also need to consider fund fees and FX.
**While Cash Investments are low risk, they’re not the same as a bank account. Your investment can go down as well as up.
Where Cash Investments really shine is when you want easy access to your cash, but don’t want it to sit idle. Maybe you’re planning on spending it soon or you’re researching your next investment opportunity. No matter your plans, Cash Investments offer a high-yield, low-risk place to park your cash in the meantime.
Freetrade does not give investment advice and you are responsible for making your own investment decisions. If you are unsure about what is right for you, you should seek independent advice.
Cash Investment Marketplace
Rate trackers
These ETFs all track the overnight banks rates get when they borrow money.
*As of 16/11/2023. Check Key Investor Information Documents for the latest info.
Capital at risk. Always do your own research.
Ultrashort bond ETFs
These ETFs all invest in ultrashort, low-risk bonds.
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*As of 16/11/2023. Check Key Investor Information Documents for the latest info.
**Each fund may measure YTM differently. Check the provider's website for more detail.
Capital at risk. Always do your own research.
A tax-efficient option
All the Cash Investments on Freetrade are ISA and SIPP eligible. Which means income and capital gains are free of UK tax. So your cash goes even further.
ISA and SIPP eligibility rules apply. Tax treatment depends on your personal circumstances and current rules may change.
FAQs
Freetrade’s Cash Investments are a collection of high-yield, low-risk ETFs. They track or try to outperform overnight rates, like the fed funds rate or Sterling Overnight Index Average (SONIA), or invest in ultrashort investment grade bonds. This makes them a popular place to park cash.
They invest in short-term, highly liquid instruments. So in a rising interest rate environment, they’re quick to pass on increased rates to investors.
Freetrade offers two categories of Cash Investments.
Rate trackers: these are ETFs that track a particular interest rate benchmark. Specifically, they either track SONIA or the fed funds rate. Which are, respectively, the rate at which UK and US banks borrow money from each other overnight.
Ultrashort bond ETFs: these are ETFs that invest in high-quality, low-risk ultrashort bonds (generally with a maturity below one year).
This refers to what an ETF does with the income (dividends or interest) that it receives from the investments in its portfolio.
If a fund is accumulating, the income is reinvested into the fund. Bring on the power of compounding!
If the fund is distributing, the income is given back to the shareholder as cash. The fund decides how often this happens - it could be quarterly, semi-annually, annually - anything goes. The KIID will make this clear.
Effective duration tells you how sensitive a portfolio of bonds is to changes in interest rates. When interest rates go up, bond prices go down. But the lower the duration, the less volatile the portfolio is. The duration for a bond ETF is considered low if it’s under 3. All of our Cash Investments have a duration below 0.54 as at 11/10/2023 - making them a low-risk addition to your portfolio.
