“The Guggenheim Enhanced Short Duration Bond ETF (GSY) yields 0.45%,” he wrote. “Although not a spectacular yield, it does pay better than many bank money market deposit accounts.”
However, Zanoni notes that ETFs charge expense ratios, while online searches turn up money market funds with yields slightly over 1%.
“Another reason to go with the bank money market accounts is the fact that they are FDIC insured which provides an extra dose of comfort or peace of mind,” he said.
In August, SEC Chairman Mary Schapiro called off an SEC vote on proposed new regulations for money-market funds, CFO.com reports. The proposal would have required funds to adopt a “floating” net asset value, meaning a fund’s NAV would rise and fall daily; forced money funds to accumulate a capital reserve to cushion against losses; and required investors seeking to redeem their shares to wait 30 days to get back 3% to 5% of their principal.
Short-duration ETFs can see their share prices fluctuate, while money market funds are designed to maintain a net asset value of $1, although financial crises have caused some funds to “break the buck.”
PIMCO Enhanced Short Maturity Strategy
