Purpose Investments has added a new fund to its line-up of cash alternative solutions.

The ETF invests in high-quality Canadian dollar-denominated money market instruments.

The Purpose Cash Management Fund (MNY CN) has been listed on the Toronto Stock Exchange with a management fee of 0.20%.

The ETF invests in a diversified portfolio of high-quality Canadian dollar-denominated money market instruments, seeking attractive yields while managing credit quality, maintaining daily liquidity, and safeguarding capital.

Purpose notes that investors have notably shifted their portfolio allocations towards greater cash exposure this year amid heightened volatility in bond and equity markets. MNY is designed to offer these investors an efficient tool to earn income on their cash positions without lock-in periods as is the case with guaranteed investment certificates.

According to Purpose, as of mid-September, the ETF has an anticipated net yield of roughly 3.30%, and the fund’s yield is expected to increase in tandem with further rate rises by the Bank of Canada.

Vlad Tasevski, COO and Head of Product at Purpose Investments, said: “Investing in non-yield optimized cash options or allocating your money in longer-term deposits can be detrimental to your portfolio when inflation is rising faster than your returns. With the Purpose Cash Management Fund, we aim to provide investors with a way to capitalize off rising interest rates while maintaining daily liquidity. Given that the markets have been so volatile, the fund will provide investors with a safe and attractive yield option for their cash balances.”

Purpose offers a further two ETFs within its cash alternatives line-up – the $380m Purpose High Interest Savings ETF (PSA CN) and $460m Purpose US Cash Fund (PSU.U CN) invests in CAD and USD cash deposit accounts held securely with Schedule 1 Canadian banks.

PSA and PSU.U currently have anticipated yields of 3.55% and 2.53% and management fees of 0.20% and 0.15%, respectively.