To The Moon

In QE time, that investors have to deposit cash in low-yield money market, so more money flew to in risk-on equities.

But now, high inflation and tighting monetary policies mean that investors can get more than 4% return simply from the money market. Some alternatives as ETFs are popular.

What choices do investors have?

Source from POEMS

Sweep accounts and Money markets Funds

Many investors default to deposite cash in sweep accounts or brokerage money market accounts.

A sweep account is usually a cash position in a brokerage account that holds such things as the proceeds of your recent stock sales. The broker moves the money to somewhere you can use later to buy new investments.

These accounts are convenient, sometimes with FDIC insurance and often pay some interest, but usually lower than the money market.

For example, Fidelity FCASH pays 2.32% interest per year on its brokerage cash position-well below the yields offered by Fidelity government Money Market Fund (SPAXX) or Fidelity Treasury Money Market Fund (FZFXX).

Certificates of Deposits

Brokerage firms typically offer certificates of deposit(CDs) ranging from a month to as long as five years, and many are currently yielding substantial yields. For example,$Charles Schwab(SCHW)$ provide large certificates of deposit for 1 to 18 months, and provide an annualized rate of return of more than 5% (In other words, that may be the reason investors selling off SCHW these days, they need to reinvest in higher assets to avoid losses)

CDs usually carry FDIC insurance, but the downside include that yields can rise even higher after you block the interest rates. If you need to cash in a deposit certificate in advance, you may also face losses or extra fees.

Treasury Bonds

Treasury bonds have no default risk, no state-income tax, and higher yields than many money market funds. For example, U.S. Treasuries with maturities ranging from 30 days to two years have yields close to or above 5% at an annualized rate.

Noted, it is better choice for Singapore investors, since Singapore is not the Most-Favored-Nation(MFN) and citizens cannot exempt from taxes.

However, buying Treasury bonds directly has the same disadvantages as large certificates of deposit-yield risk, complicated purchase procedures, and possible losses if sold in advance.

Short-term Treasury ETF

Short-term Treasury ETFs (which usually invest in Treasury bills up to 90 days) may be the best place to park cash now.

These funds offer essentially the same liquidity, low risk, generous yields and income tax-free as you own Treasury bonds directly, while you can buy them yourself.

For instance,

iShares 0-3 months national debt ETF $iShares 0-3 Month Treasury Bond ETF(SGOV)$ , 30-day rate of return is 4.49%;

IShares Short-term Treasury Bond ETF $iShares Short Treasury Bond ETF(SHV)$ The ETF buys 3-to 12-month-old Treasury bills and keeps rolling them over. As of early March, SHV had a fee ratio of 0.15 percent and a 30-day SEC yield of 4.54 percent.

SPDR Bloomberg 1-3 Month Treasury Bills ETF $SPDR Bloomberg Barclays 1-3 Month T-Bill ETF(BIL)$ The rate of the ETF is 0.1354%, and the 30-day yield is 4.37%.

US Treasury 3-month note ETF $US Treasury 3 Month Bill ETF(TBIL)$ . TBIL invests in 90-day Treasury bills and often rolls them over, with the fund charging a rate of 0.15 percent;

Vanguard Short-Term Treasury Index Fund $Vanguard Short-Term Government Bond Index Fund ETF Shares(VGSH)$ , as of early March, the fund had a 0.4% rate, but a 30-day yield of 4.82%

Medium-term national debt ETF

Today's upside-down yield curve means that investors can actually get higher interest rates from shorter-matured bonds than longer-matured ones. Buying medium-term US Treasury ETFs, which usually invest in 7-to 10-year US Treasury bonds, allows you to lock in the current interest rate for a long time.

For instance,

iShares 7-10-year Treasury Bond ETF $iShares 7-10 Year Treasury Bond ETF(IEF)$ . The ETF fee rate is 0.15%, and the 30-day yield is 3.82%;

IShares Treasury Floating Rate Bond ETF $iShares Treasury Floating Rate Bond ETF(TFLO)$ at a fee rate of 0.15% and a 30-day yield of 4.72%, and invested in floating-rate government bonds with a maximum maturity of two years.

Pioneer Medium Term Treasury Bond ETF $Vanguard Intermediate-Term Government Bond Index Fund ETF Shares(VGIT)$, with a fee rate of 0.4% and a 30-day yield of 4.15%.

Take whatever as you wish

You can also read Enjoy Up to 4.54% Return in Tiger Vault After Withdrawl From US Banks to learn more about money market fund.