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RBC iShares

Welcome to the new RBC iShares digital experience.

Find all things ETFs here: investment strategies, products, insights and more.

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RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. and iShares ETFs managed by BlackRock Asset Management Canada Limited ("BlackRock Canada"). The information and opinions herein are provided for informational purposes only and represent the views of BlackRock Inc. and do not necessarily represent the views of RBC Global Asset Management Inc.

Key takeaways
• As cash yields fall, investors may benefit from moving out of cash and back into fixed income.

• With attractive yields available in short-term bond markets, investors looking to put their cash to work may consider using ETFs to add income and diversify their fixed income allocations.

With central bank rate cuts underway, investors run the risk of missing out on the opportunity to lock in attractive fixed income yields. This is particularly true for those still holding cash or short-term Guaranteed Investment Certificates (GICs). As cash rates have fallen, yields on these investments will quickly adjust, resulting in lower income for investors who continue to hold them. As such, investors may want to consider moving out of cash or cash-like investments and into short-term bonds to take advantage of more attractive yields while reducing reinvestment risk (Exhibit 1).

While cash can have a role for clients managing short-term liquidity needs, investors have a range of compelling short-term bond ETF solutions to diversify risk, potentially enhance yields, or help provide stability.  

Exhibit 1: Comparison of yields currently available on different short-term investments

Exhibit 1 Comparison of yields currently available on different short term investments

Source: BlackRock, RBC as of 3/31/2025. Savings Account from RBC; 1-year non-redeemable GIC from RBC; Yield-to-maturity proxies used: Money Market: iShares Premium Money Market ETF (CMR). Cdn Short Term Bond: FTSE Canada Short Term Overall Bond Index™, Cdn Floating Rate: FTSE Canada Floating Rate Note Index™, Cdn Short Term Corp: FTSE Canada Universe + Maple Short Term Corporate Bond Index™. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Yield to Maturity (YTM) is the discount rate that equates the present value of a bond's cash flows with its market price (including accrued interest). YTM is gross of ETF fees and expenses.

Diversification options for cash and short-term savings

For many, it helps to think of your cash in layers, and segment it based on how soon you will need to use it. As a general rule, the sooner the investor needs to use the cash, the less risk they may want to take on with an investment.

For daily cash needs to pay for living expenses like gas and groceries, bank accounts are the most flexible. You can add or withdraw money at any time. They are also insured, up to $100,000 per account, by the Canadian Deposit Insurance Corporation (CDIC). Most savings accounts pay interest, although the rate can be low. Some accounts have no fees, but with others you may be charged for deposits or withdrawals.

For any additional cash that you don’t need immediately, you have options beyond a bank account. These include GICs, money market funds and short-term fixed income ETFs. However, it’s important to note there are differences between these options, including investment objectives and risks (Exhibit 2). We highlight some of the options below.

Cash alternatives options

  • A Guaranteed Investment Certificate (GIC) is an investment that generally pays a set rate of interest over a fixed period of time until maturity, whereupon the original principal is returned. Similar to a savings account, GICs are insured by the CDIC up to a certain amount. However, as GICs tend to have a fixed term, an early withdrawal may result in a penalty.

  • Money market mutual funds and ETFs invest in low-risk, short-term debt securities that typically mature in less than one year. This may include treasury bills, promissory notes, bankers’ acceptances, commercial paper, investment debt securities, and more. iShares Premium Money Market ETF (CMR) is an example.

  • Floating rate note ETFs: Floating rate notes typically have limited price sensitivity to interest rate moves, making them a potentially less volatile investment option. Investment grade floating-rate bonds can keep up with the interest rate increases, since the bonds’ coupon payments adjust as short-term rates change.  iShares Floating Rate Index ETF (XFR) invests in high quality, investment grade Canadian floating rate bonds, with coupons that resets quarterly based on prevailing interest rates.

Short-term fixed income ETFs

  • Short-term Canadian fixed income ETFs invest in low-risk, short-term debt securities that typically mature in less than five years. Short term fixed income ETFs can provide efficient, diversified access to a range of exposures, including the iShares Core Canadian Short Term Bond Index ETF (XSB), iShares Core Canadian Short Term Corporate Bond Index ETF (XSH), and RBC Canadian Ultra Short Term Bond ETF (RUST). It’s important to note that like individual bonds, the prices of bond ETFs may fluctuate depending on interest rate movements. Short duration bond ETFs typically carry a higher degree of risk than cash alternatives and should not always be used as a substitute.

  • Short-term global fixed income ETFs expand the opportunity set for investors beyond local markets offering access to harder-to-reach fixed income sectors. iShares Flexible Monthly Income ETF (CAD-Hedged) (XFLX) seeks the best opportunities for income around the globe offering investors a diversified nimble approach with the objective of maximizing risk adjusted yield.

  • Target maturity bond ETFs invest in a basket of bonds that all mature in the ETF’s stated maturity year, and the ETF will terminate in the same year. This type of ETF provides investors with the maturity and cash flow experience similar to holding individual bonds while providing the diversification and intraday trading benefits of an ETF. RBC offers a suite of 24 target maturity bond ETFs with short maturity ranging from 2025 to 2030, and exposure ranging from Canadian government bonds, Canadian investment grade corporate bonds, and U.S. investment grade corporate bonds. Learn more.

  • Discount bond ETFs aim to invest in bonds with deeper price discounts compared to the relevant universe. By doing so, these ETFs may deliver a more attractive after-tax return in non-registered accounts by having part of the return come from capital gains rather than interest income. RBC Canadian Discount Bond ETF (RCDB) and RBC U.S. Discount Bond ETF (RUDB) are discount bond ETFs that invest in the universe of short term bonds.

  • Inflation-linked bond ETFs is a tool for investors seeking to protect against higher-than expected inflation. For example, iShares 0-5 Year TIPS Bond Index ETF (CAD-Hedged) (XSTH) invests in short term U.S. government bonds with principals that adjust based on changes in inflation as measured by the U.S. Consumer Price Index (CPI).

Daily Liquidity

CDIC Insured

Principal Protection

Diversified Exposure

Savings Accounts

✓

✓

✓

GICs

✓

✓

Money Market Funds

✓

✓

Short-Term Fixed Income ETFs

✓

✓

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Conclusion

When putting cash to work, it is important for investors to balance their needs for preservation of capital, income and liquidity. With attractive yields currently available in bond markets, investors can consider using ETFs to add income and diversify their fixed income allocations.

RBC iShares offers a variety of fixed income ETFs across a range of strategies: money markets, floating rate, target maturity, short-term, global bonds, ESG and inflation-linked. In addition to strategic asset allocation, investors can implement these strategies in a targeted way as new opportunities evolve. The transparency of ETFs can also help investors better understand the underlying investments and the level of risks they are taking. This is a key element for building portfolios in any environment, but especially in times marked by high volatility and uncertainty.

Exhibit 3 – Select RBC iShares short-term bond ETFs

Exposure

Name

Ticker

MER

Money market

iShares Premium Money Market ETF

CMR

0.13%

Floating rate bonds

iShares Floating Rate Index ETF

XFR

0.13%

Short duration Canadian bonds

RBC Canadian Ultra Short Term Bond ETF

RUST

0.20%*

Short duration Canadian bonds

iShares Core Canadian Short Term Bond Index ETF

XSB

0.10%

Short duration Canadian bonds

RBC Canadian Discount Bond ETF

RCDB

0.16%

Short duration Canadian investment grade corporate bonds

iShares Core Canadian Short Term Corporate Bond Index ETF

XSH

0.10%

Target maturity bonds

RBC target maturity bond ETFs

TMBs

0.17-0.23%

Global bonds

iShares Flexible Monthly Income ETF (CAD-Hedged)

XFLX

0.55%

Short duration Inflation-protected Securities (TIPS)

iShares 0-5 Year TIPS Bond Index ETF (CAD-Hedged)

XSTH

0.17%

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*Management fee (%)

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Disclosure

Publication date: May 5, 2025


Investing involves risk, including possible loss of principal.


RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. and iShares ETFs managed by BlackRock Asset Management Canada Limited ("BlackRock Canada").


Commissions, trailing commissions, management fees and expenses all may be associated with investing in exchange-traded funds (ETFs). Please read the relevant prospectus before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.


For CMR: Commissions, trailing commissions, management fees and expenses all may be associated with investing in exchange-traded funds (ETFs). Please read the relevant prospectus before investing. Fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.


The iShares ETFs  are not connected, sponsored, endorsed, issued, sold or promoted by Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services,  Limited (“Bloomberg”), Cohen & Steers Capital Management Inc., London Stock Exchange Group plc and its group undertakings (“LSE Group”, ICE Data Indices, LLC.,  ICE Benchmark Administration Limited, Jantzi Research Inc., Markit Indices Limited, Morningstar, Inc., MSCI Inc., MSCI ESG Research and Bloomberg, NASDAQ OMX Group Inc., NYSE FactSet or S&P Dow Jones Indices LLC. (“S&P”). None of these companies make any representation regarding the advisability of investing in the iShares ETFs. BlackRock Asset Management Canada Limited is not affiliated with the companies listed above.


The Prospectus contains a more detailed description of the limited relationship the companies have with BlackRock Asset Management Canada Limited and any related ETFs.


® / TM Trademark(s) of Royal Bank of Canada. Used under licence. iSHARES is a registered trademark of BlackRock, Inc., or its affiliates. Used under licence. © 2025 BlackRock Asset Management Canada Limited and RBC Global Asset Management Inc. All rights reserved.


iCRMH0525C/S-4463414 

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® / TM Trademark(s) of Royal Bank of Canada. Used under licence. iSHARES is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. Used under licence. © 2025 RBC Global Asset Management Inc. and BlackRock Asset Management Canada Limited. All rights reserved.
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