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High-interest savings ETFs “continue to rake in money,” with the category seeing $854 million in inflows in March and $2.76 billion in the first quarter, according to National Bank Financial.

“The asset class has meaningfully grown over the last couple of years and has been a huge benefit for the end investor,” said Vlad Tasevski, chief operating officer and head of product with Purpose Investments Inc., citing increased access to interest rates previously only available to wealthy depositors.

Amid that growth, the Office of the Superintendent of Financial Institutions (OSFI) initiated a review of HISA ETFs this past fall. The review is part of “regular, ongoing work to address concerns that financial institutions bring to us every day on a host of matters,” an OSFI spokesperson said in an email. The review was first reported in the Globe and Mail.

Raj Lala, president and CEO of Evolve Funds Group Inc., said he is “hopeful that a positive conclusion is drawn” from the OSFI review because the ETFs “have been very sticky assets, and they’ve grown significantly.”

Evolve and Purpose both offer U.S. and Canadian HISA funds.

Purpose recognizes that OSFI wants to better understand the products and their impacts in light of their popularity, Tasevski said.

On March 17, Purpose proposed expanding the objective of its Canadian HISA fund to include money market securities, which was planned well before the OSFI review was made public, Tasevski said. However, the objective change is only meant to provide Purpose with the same flexibility as HISA funds that launched after Purpose’s did in 2013.

“We have no intention to change the current holdings,” he said.

Tasevski added that the failures of Silicon Valley Bank and Signature Bank in the first half of March did not influence the proposal, either.

“We have no sign or indication from any of our investors that they actually are concerned with our offerings, because we are [invested] in Canadian banks,” he said. They are “the most regulated banks in the G20 … and we only deposit with the Big Six.”

Year-over-year fund flows bore out that investor confidence: National Bank reported that in the first four months of 2022, cash-alternative ETFs had inflows of $832 million, $22 million less than the inflows for March 2023 alone.

Lala agreed that investors should be confident in the strength of Canadian banks: “I often say to people, if you’re worried that one of the Big 6 banks in Canada is going to become insolvent, we’re going to have much bigger problems to deal with in this country.”