Q: In my RIFF, cash from income and some sales are put into the BMO HISA or ZJK to accumulate enough for my annual required withdrawals. My ZJK holdings are only touched if I am short when December comes and I enjoy the 6% distribution. I am flat or slightly to the positive at the current ZJK market price. I am wondering if the rising CDN dollar this year and the possibility of settling CUSMA will eat into the yield on ZJK to the point that the BMO HISA (1.95%) might be the better option this year. What would you do and where would you store the cash needed for annual withdrawals? Thank you for your great service.
5i Research Answer:
While both options are on the safer side of the spectrum, the two are still quite different with the HISA being more of a cash equivalent and ZJK being high yield corporate bonds. With rates in the US still likely to trend lower and the backdrop for the US economy remaining stable, we wouldn't really be concerned with US high yield exposure and think it will continue to do fine from here, with the caveat that the risk profile is a bit different from a HISA.