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Advantages of Holding Cash During Market Volatility & Inflation

Tags: Cash, Cash alternative ETFs, ETF, high interest savings account, HISA etf, Inflation, Interest Rates, investing, investors, stock market, stocks

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Even during the worst stock market sell-off there are usually safe haven investments. But the current economic environment has many people wondering if this one does. Stocks are crumbling, bond prices are tumbling, and cash is being eaten away by inflation.

So far in 2022, the Bank of Canada has raised its key lending rate three times, to 0.5% in March, followed by two more aggressive 0.5% increases, taking it to 1.0% in April and 1.5% in June. The Bank of Canada is just getting started and is expected to raise its key lending rate three more times in 2022 alone.

To tame galloping inflation, the Bank of Canada also said it was open to larger rate increases if needed. This could include a rate hike of 0.75% when it meets again in July. This gives investors even more reason to consider the benefits of a high-interest savings account fund.

As of this writing, the S&P 500 is in correction territory, down 18% from early January highs. A correction is defined as a drop of between 10% and not more than 20% from recent highs. The Nasdaq, meanwhile, is deep in bear market territory, down 27% from November 2021 highs. A bear market is defined as a drop of at least 20% from recent highs.

Will Stocks Continue to Fall?

The stock market sell-off has more room to run, too. Deutsch Bank AG cut its baseline market forecast and said the S&P 500 could drop to 3,000 if there’s a recession. That represents a 23.5% decline from current levels and a 37.7% drop from January 2022 highs. Bank of America Corp sees the S&P 500 closing out 2022 at 3,200—an 18% drop from current levels and a 33.5% fall from January 2022 highs. Credit Suisse sees the S&P going to 4,600.

Typically, when stocks fall, investors can find shelter in bonds. That’s because bond yields increase due to the increased demand for defensive assets. During the first quarter of 2022, all major stock indices were in the red. Despite that, bonds failed to provide any downside protection.

Investors might think that with all the uncertainty it makes sense to sit on the sidelines and wait until the stock market bottoms. Unfortunately, it’s impossible to predict when the stock market will bottom. If anything, analysts are calling for stocks to continue to slide.

How You Could Manage Inflation

Canadian inflation is at a 40-year high and U.S. inflation is at a 41-year high. That means the cost of everything is up. On top of that, inflation is chipping away at the purchasing power of that cash every single day.

Inflation is a kind of hidden tax that most investors don’t think about. They see how inflation hurts them at the grocery store and gas station, but don’t think about it when it comes to their wealth.

The fact is, the spread between income generated in a typical savings account and the income needed to actually beat inflation has never been wider. Sitting on cash means that the money will have less buying power tomorrow than it does today.

As a result, investors are left wrestling with two disparate wants: a safe place to park their money and a way to generate returns.

One popular investment investors are turning to, and a great place to park their money, is high-interest, cash alternative exchange traded funds.

What Are Cash Alternative ETFs?

Exchange traded funds, or ETFs, are an investment fund similar to a mutual fund. ETFs typically invest in a basket of individual stocks or government and corporate bonds all at once. A big benefit of investing in an ETF over a mutual fund is that ETFs trade like stocks.

There are literally thousands of ETFs available, targeting different stocks, assets, markets, investment strategies, and risk tolerances. The goal of a well-diversified ETF is to track the performance of the underlying index or industry it follows.

A high-interest ETF makes deposits in high-interest savings accounts at major financial institutions. This allows investors to profit from the underlying accounts’ return rates. All of which have been steadily increasing alongside rising interest rates.

High-interest savings account ETFs are ideal for investors who are:

  • Risk-averse
  • Seeking exposure to high-interest deposit accounts with attractive yields
  • Looking for a convenient, liquid, and short-term investment
  • Wanting to generate reliable monthly cash flow
  • Wanting a low-cost investment

Investors are facing a lot of uncertainty right now and with inflation eating away at consumers’ purchasing power, sitting on the sidelines isn’t an option. One of the best ways to fight inflation and generate income is through an ETF that is tied to a high-interest savings account.

HISA ETF: High Interest Savings Account Fund

Evolve’s High Interest Savings Account Fund (NEO: HISA) seeks to maximize monthly income while preserving capital and liquidity by investing primarily in high interest deposit accounts with four of Canada’s big six banks. It is available in ETF and mutual fund classes (Class A and Class F). To learn more about HISA ETF, please visit our website or go to the HISA ETF fund page.

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The contents of this blog are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed. These contents are not an offer or solicitation of an offer or a recommendation to buy or sell any securities or financial instrument, nor shall it be deemed to provide investment, tax or accounting advice. The information contained herein is intended for informational purposes only.
Commissions, management fees and expenses all may be associated with exchange traded funds (ETFs) and mutual funds (funds). Please read the prospectus before investing. ETFs and mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. There are risks involved with investing in ETFs and mutual funds. Please read the prospectus for a complete description of risks relevant to ETFs and mutual funds. Investors may incur customary brokerage commissions in buying or selling ETF and mutual fund units.
Certain statements contained in this blog may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Evolve Funds undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.
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Disclaimer


The content on this Website is provided for informational purposes only and is not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard. You should not act or rely on the content on this Website without first seeking the advice of appropriate professional advisors.

Commissions, management fees and expenses all may be associated with exchange traded mutual funds (ETFs). Please read the prospectus before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. There are risks involved with investing in ETFs. Please read the prospectus for a complete description of risks relevant to the ETF. Investors may incur customary brokerage commissions in buying or selling ETF units.

Privacy Protection Policy

Client information is private and confidential. Evolve recognizes that clients have a right to have their information protected.

Evolve’s Privacy Protection Policy governs the collection, use and disclosure of personal client information. Specifically, this policy outlines how Evolve complies with provincial and federal regulations governing client information including the Privacy Act and the Personal Information Protection and Electronics Document Act (PIPEDA).

PIPEDA is the privacy legislation of the Canadian federal government as of January 2004. Under PIPEDA no business may collect, use or disclose personal client information without clearly defining the purpose of such collection, use or disclosure and obtaining informed consent. The collection, use or disclosure is limited to purposes that a reasonable person would consider appropriate in the circumstances. The legislation further regulates the protection, retention and destruction of client information. PIPEDA offers clients the right to access their information upon request and challenge the information that is being retained.

The key privacy principles of PIPEDA form the basis of Evolve’s comprehensive Privacy Protection Policy.

Accountability

It is important to safeguard private and confidential client information. Therefore, Evolve’s Chief Compliance Officer has been designated Evolve’s Privacy Officer. The Privacy Officer will confirm compliance with privacy legislation and inform personnel of the need to use the utmost discretion when dealing with client information. The Privacy Officer will monitor and assess the environment of compliance in terms of protection of private client information.

Intended Purpose

Client information is any information that identifies an individual including such items as: an individual’s name, address, age, financial information, social insurance number, personal e-mail address and telephone numbers. Client information may be in paper or electronic form.

Evolve may collect and retain client information for a number of purposes including to: determine a client’s identity, determine eligibility for a product, protect all parties against fraud and potential money laundering, comply with legal requirements (e.g. court order) and communicate with the client.

Evolve will use client information only for the purposes identified at or before the time of collection. Evolve does not sell or rent client information.

Consent

All information concerning unitholder transactions and their accounts are confidential and must not be disclosed to anyone other than the unitholder or her/his dealer unless the intended purpose is disclosed.

Should client information be required for a new purpose, Evolve will take the necessary steps in order to seek additional consent.

Consent may be expressed in writing, orally or implied directly by the client or their registered dealers. In most cases consent is obtained via the subscription agreement process for client investments in funds managed by Evolve. All client information collected by Evolve will be kept confidential and shall not be disclosed to any third party, except for the specific reasons below or if the client has provided express consent.

From time to time, requests for client information may be received from: government agencies; law enforcement agencies; securities commissions; other self-regulatory organizations (SROs); or under a court order. Express consent will not be required if needed for: audit, statistical or record-keeping purposes; a legal reason or request by securities regulatory authority or SRO; to collect a debt owed by the client; to a legal professional for the purposes of obtaining legal advice; and pursuant to a court order. Should Evolve be asked to produce confidential information by any such entity, the Privacy Officer will comply. In some cases, the Privacy Officer may provide information on its own initiative if there are reasonable grounds to believe crime or a violation of securities regulation is involved.

Consent to use personal information may be withdrawn by a client at any time.

Collection

Client information will only be collected as needed for intended purposes. During the course of providing products or services to client, Evolve may collect personal information in several different ways: the website, by telephone, by written correspondence, or by e-mail. The purpose of collection of personal information is for the sole purpose of providing products/services and in order to adequately communicate information.

Upon acceptance of the user agreement on the website, visitors’ information is collected for the purpose of answering inquiries, providing marketing materials, corporate background and invite guests to access services.

Website information is collected in many forms including by obtaining the domain name of visitors, the email addresses and personal information that is volunteered, dealer information and geographic location. Evolve’s website may employ a standard technology to collect information about how the firm’s site is used for the purposes of improving website design.

Evolve does not transfer collected information to competitors. Website guests may occasionally receive emails from Evolve informing them of products and services.

Use, Disclosure and Retention

Client information will only be used for the purposes for which it was collected.

Evolve may share client information with authorities for regulatory or tax reporting purposes. Information may also be shared with SROs and legal bodies for reasons previously discussed.

Client information may also be shared with external service providers to Evolve and its products. Service providers include, but are not limited to: auditors, valuation agents, back office support, registrar and transfer agents and legal counsel. These service provider relationships are governed by agreements that confirm the proper handling and protection of client information.

Client information will only be retained for as long as needed in order to satisfy the stated purposes at the time of collection. When the information is no longer required necessary measures will be taken to destroy, dispose of, or delete the information.

Accuracy

It is important for Evolve to keep client information accurate in order to provide quality service and minimize the potential for misuse.

Evolve strives to keep client information correct, complete and up-to-date. Clients may be contacted periodically to ensure information is accurate on file.

Clients are requested to advise Evolve of any changes to client information, as Evolve is not liable for errors that cannot be corrected without client input. Should an inaccuracy be found, Evolve will act efficiently to correct it at no cost to the client.

Safeguards

Evolve has implemented various processes to safeguard personal information and restrict access to private information to personnel who need to know the information in order to service clients. Security measures include passwords on networks and systems and restricted access to the offices, and records within the offices.

Employees should be mindful to ensure that unitholder information is protected. Generally speaking, employees are not to disclose to other employees who do not have a legitimate need for the client information. In particular, all information and materials that employees access must be kept confidential, even after employment has ended. Annually, each of Evolve’s employees is required to attest to compliance with Evolve’s policies including the Privacy Protection Policy.

Note on Media: employees are not to communicate with the media – all media inquiries must be directed to Keith Crone.

Directness

Evolve makes every effort to explain policies and procedures to clients and explain how client information is managed. Evolve’s Privacy Protection Policy will be provided upon request by e-mail or phone. Also, a copy can be found on Evolve’s website. If clients have additional questions they may contact the Privacy Officer for clarification.

Access

Clients have a right to their personal information. Clients have the right to verify the accuracy and completeness of their personal information, and may request that it be amended. Upon request (in writing) with appropriate supporting documentation confirming identity, clients will be given their client files.

Under certain circumstances Evolve may not be able to provide clients with access to specific pieces of information. For example, clients will not be granted access to information containing references to other persons or that has proprietary information confidential to the firm. Also, access will not be provided to information that has been destroyed or is too costly to retrieve.

The Privacy Officer will respond to requests for access in writing within 30 days of receipt.

Complaint Process

Inquiries and complaints will be reviewed by the Privacy Officer and dealt with in a timely fashion. Specifics steps of Evolve’s privacy complaint recourse process are:

  1. All complaints are directed to the Privacy Officer who will maintain a detailed file on the complaint.
  2. The complainant will be notified of receipt of the complaint. All other applicable parties will be provided notice as well.
  3. The Privacy Officer will conduct an investigation to gather all necessary facts pertaining to the complaint.
  4. Following the investigation, the Privacy Officer will make a determination that either no other remedy than a clear explanation to the client is warranted or that the complaint is substantiated and as such, specific action is required. Some examples of specific recourse include implementing additional safeguards, employee training and documentation revision.
  5. The client will be advised of the decision in writing with details of the findings and subsequent recourse action, if any. Where applicable, a formal apology will be issued by Evolve or a third party for the mishandling of client information.

Clients who remain dissatisfied with the results can bring the complaint to the attention of the federal Privacy Commissioner who is the ombudsperson for complaints under PIPEDA at:

Officer of the Privacy Commissioner

112 Kent Street, Place de Ville, Tower B, 3rd Floor, Ottawa, Ontario K1A 1H3

The request must be made in writing and include full contact details and as much detail as possible about the complaint.

Evolve’s Privacy Protection Policy is intended to provide clients with comfort that their personal information is handled with the utmost importance and care.

Evolve is continually balancing clients’ right to privacy with the needs of the business and therefore, welcome any feedback on how privacy protection policies and procedures can be improved.

Other Information

The Personal Information Protection and Electronic Document Act website:

https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/

 

Website

This privacy policy sets out the information gathering and dissemination practices of Evolve Group Inc. (“Evolve ETFs”) in the use of the evolveetfs.com website. By using the website, you are consenting to this privacy policy and the collection, use and disclosure of your personal information by Evolve as outlined in this privacy policy. If this privacy policy is not acceptable to you, please do not submit any of your personal information. We may update this privacy policy from time to time and you are responsible for periodically reviewing the most current version of this privacy policy on the Website. Your continued use of the Website or submission of Collecting, Using and Disclosing Information. This privacy policy describes our policies regarding the collection, use and disclosure of the personal information that we (or our Service Providers on our behalf) collect about you on the Website such as your name, address, phone number, fax number, e-mail address or payment information. We may collect this information when you subscribe to, or sign your company up for, certain services, tools or features that we provide, when you register for seminars or other programs that we offer, when you fill out forms made available through the Website, when you enter a promotion or contest, when you complete a survey, when you e-mail us with general inquiries or with your comments or suggestions, or otherwise in connection with your use of the Website. We will limit the personal information we collect to what we need for the purposes for which it was collected, and will use such personal information for such purposes. We may also use personal information we collect to provide you with information on products, services and events that we or third parties offer that we believe may be of interest to you. If we wish to use your personal information for any other purpose, we will obtain your consent before using the information.

Storing of Information and Restricting Access
We may store your personal information (in encrypted form where we believe it to be highly sensitive) in electronic databases or e-mail boxes hosted by us or our Service Providers, for periods of time and with safeguards that we believe are reasonable depending on the nature and sensitivity of the information. Access to the information is restricted in accordance with our security protocols.
Due to the nature of Internet communications and evolving technologies, Evolve cannot provide assurance that the personal information we collect will remain free from loss, interception, misuse or alteration by third parties and Evolve shall have no liability for any loss, interception, misuse or alteration.

Automatic Collection of Information
In some cases, we may collect information about you that is not personally-identifiable. Examples of this type of information include your Internet protocol (IP) address, the type of Internet browser you are using, the type of computer operating system you are using, and the advertisement or domain name of the website from which you linked to the Website.

Cookies
Some pages on the Website use a technology called “cookies”. A cookie is a token that a server gives to your browser when you access a website. Cookies are capable of storing many types of data. Cookies may be placed by Evolve or a third party. Cookies help provide additional functionality to the Website or help provide and analyze Website traffic and usage information. For instance, our server may set a cookie that keeps you from having to enter a password more than once during a visit to one of the Website. In all cases in which cookies are used, we will not collect personally-identifiable information except with your permission. With most Internet browsers, you can erase cookies from your computer hard drive, block all cookies, or receive a warning before a cookie is stored. Please refer to your browser instructions or help screen to learn more about these functions.

Releasing Information
We may provide your personal information to other persons but only if: we have your consent; we provide the information to Service Providers who assist us in serving you and who have agreed to appropriate contractual provisions regarding the protection of personal information in accordance with applicable law; or we are required to do so by law, regulation or court order. We may send your personal information outside of the country for the purposes set out herein, including for process and storage by Service Providers in connection with such purposes, and you should note that while such information is out of the country, it is subject to the laws of the country in which it is held, and may be subject to disclosure to the governments, courts or law enforcement or regulatory agencies of such other country, pursuant to the laws of such country.

Respecting and Responding to Your Privacy Concerns
You have the option to refuse or withdraw consent to the collection, use and disclosure of your personal information, and we will respect your choices. If you wish to exercise this option or if you have any questions or enquiries with respect to our privacy policies or procedures, please send a written request to: info@evolveetfs.com. We will investigate and respond to your concerns about any aspect of our handling of your information. If you wish to edit and/or delete your information related to the tool features on our Website (including changing your settings such that you no longer receive Alerts), you may do so online through the Tools section on evolveetfs.com

Disclaimer

The content on this Website and any communications from Evolve is provided for informational purposes only and is not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard. You should not act or rely on the content on this Website without first seeking the advice of appropriate professional advisors.

BY USING THE WEBSITE, YOU ACKNOWLEDGE THAT YOU HAVE READ THIS PRIVACY POLICY, UNDERSTAND IT AND AGREE TO ALL OF THE TERMS AND CONDITIONS IN THIS PRIVACY POLICY AND DISCLAIMER.