This rates have been rather low of late, this has prompted a lot of investors to look into ETFs and other short term bonds as an alternative. There are a lot of conservative ETFs on the market that actually yield better returns than money market accounts these days.
How do ETFs earn?
Exchange traded funds or ETFs, work on the principle of bundling together diversified exchange based securities to minimize risk. ETFs are setup up to rise and fall with a major market index. Several well known brokerage houses such as Barclays, Pimco and Fidelity now offer money market ETFs as an alternative to money market accounts.
With such ETFs "non-immediate" cash allocations is the aim, this enables less conservative investments and potentially higher yields. The risks taken are cushioned by the diverse investments that are made. Active ETFs while not very liquid, generally earn better yields.
Active ETFs are Earning High Interest
Since the introduction of the active ETF, yields have varied greatly, the trend these days though is that they offer better returns than most money market funds. Traditional ETFs have continued to do well despite the bleak economy. For reasons that can't be explained, ETFs just don't seem to be too affected by these uncertain times.
As ETFs go, the wisest investments are those that are highly customized. Don't grab up a certain type of ETF just because it's popular to do so. The best thing to do is to talk to a consultant so that he can advise you on the best ETFs for your portfolio. While ETFs are already diversified, further diversification within your portfolio will yield better returns.
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