Rate trackers: these are ETFs that are designed to closely mimic a benchmark interest rate. In this case, either SONIA or the fed funds rate - the rates at which UK and US banks borrow money from each other overnight.
Check Key Information Documents for the latest info.
Check the provider’s website for more detail and the latest yield-to-maturity (YTM).
Capital at risk. Always do your own research.
Overnight rates change with market conditions which means that the rate you receive may rise or fall. You’ll also need to consider fund fees and the impact of FX rates.
While Cash Investments are low risk, they are not the same as a bank account. The value of your investments can go down as well as up and you may get back less than you invest.
Make sure you do your own research on what investments are right for you before investing or consider seeking expert advice.
Glad I found this thread; I have money sat in my ISA waiting to buy stocks and it’s frustrating I can’t put it to work whilst I wait! In other banks I can get 4-5% instant access but don’t want to take out my ISA. So what tickers can I buy through my ISA to get me 5% as advertised? Does it pay monthly or annually? Some info be great so I can buy
It’s important to remember there are currency considerations with ETFs like this.
Forex has always been a bit of a mystery to me, so I could be wrong, but I think this loss is caused by sterling rising against the dollar over the past month or so.
As I understand it (not very well), if the exchange rate returned to pre-inflation madness levels (ie $1:72p) – you’d be nursing a 10%ish loss in forex terms.
Plus, the Fed rate could fall in future which would dampen returns.
I’m sure someone who understands forex better will correct me if I’m wrong on this!
FX Fee and fund fee apply as MMF’s are ETFs and the instrument currency is USD.
I would not recommend them for a period shorter then 6 months, 12 months certainly better. The fund price grows steady but slowly, and your investment would not have enough time to appreciate significantly.
Also, as in my case, the exchange rate can be higher than the short term return of investement.
Check the exchange rate trend before buying and selling
I may buy a $ ETF eventually when conditions are more favourable and I’ve got my head around forex.
It strikes me as a good place to park some money to spend when there’s a crash as you usually see a flight to the dollar and a fall in ‘risk-on’ currencies like GBP.
I have a lot of exposure to sterling so it’d help from a diversification point of view too.
I don’t ordinarily try to time things but I’d make an exception with this. I think I’d want to see Fed cuts, roaring markets and, hopefully, a better FX rate so I can buy a bunch more $ for every £.
Over the long term, you’re much better off in equities due to inflation.
Surely the way to look at it is the interest rate is the fiscal tool governments use to combat inflation.
Presumably in these indexes, the value of them is determined by the sentiment of the future direction of said interest rates and beyond any speculation, you accumulate dividends at a comparable rate.
Clearly investing in overnight rates over the past year has outperformed the FTSE, wrt rising/higher rates.
