High interest cash ETFs, term deposits and savings accounts – Which reigns supreme?

Discover how cash ETFs challenge the bread and butter savings accounts and term deposits.
Kerry Sun

Livewire Markets

Interest rates have climbed 425 basis points over the past two years and, as a result, investors are once more turning their attention towards cash and high-interest savings accounts. But your bank account isn’t the only way to secure an attractive return.

Cash exchange traded funds (ETFs) have emerged as an alternative option to challenge the returns offered by a typical savings account and term deposit. These ASX-listed ETFs invest in various cash products offered by major financial institutions.

There are currently three Australian ETFs available for investors:

What are the advantages of cash ETFs?

  • Attractive rates: ETF issuers can negotiate a higher interest rate with banks, surpassing those typically available through a standard savings account.
  • Faster follow through: The interest rate on cash ETFs tends to move right after the RBA announces interest rate changes.
  • No conditions: High-interest savings accounts often come with criteria such as regular deposits, and purchase conditions and typically only apply for balances of up to $200-250,000.
  • Fully tradeable: These ETFs are fully tradeable on the ASX – You can buy and sell these whenever you want. The only thing you have to pay is your typical brokerage fees.

Taking a closer look

AAA is the largest and most liquid cash ETF on the market. BILL has the lowest costs. ISEC offers a marginally higher interest rate and the lowest spread (slippage). All three cash ETFs pay monthly distributions and offer similar yields of around 4.5% per annum.




Listing Date

March 2012

June 2017

June 2017


$3.3 billion

$770 million

$252 million

Current Interest Rate




Management Fee








Turnover (20-day avg)

$14 million

$1.9 million


Data as at 28 March 2024

AAA has the best performance over the short-to-medium term. This can be explained by the ETF's underlying strategy and holdings.

  • AAA primarily invests in at-all bank deposits (no maturity), notice deposits (lock-up periods of 31-90 days) and term deposits (maturity of up to 90 days). The ETF limits its exposure to cash deposits with over 31 days' maturity to 30%.
  • BILL invests in deposits that can be sold on the same day (at-call bank deposits, commercial paper and treasury notes).
  • ISEC seeks higher interest rates through investments in floating rate notes and commercial paper. This approach introduces lower credit quality and volatility.
  • Putting it all together: AAA has outperformed by largely investing in deposits with relatively short maturity periods. BILL has a preference for deposits that can be sold on the same day, which tend to have lower yields compared to those with longer lock-up periods. ISEC takes on a little more risk, which has seen outperformance over one year but underperformance over the three-year and 5-year periods (relative to AAA).




1-Year Total Return




3-Year Total Return




5-Year Total Return




Data as at 28 March 2024 (Source: Betashares and iShares website)

How does this compare with cash?

A 12-month term deposits from ANZ, Commonwealth Bank and NAB offer higher returns than the three cash ETFs.





6 Month





1 Year





3 Year





5 Year





Source: Canstar, 14 March 2024

As for savings accounts, here are a couple for comparison:

  • Commonwealth Bank’s NetBank Saver account offers 5.10% pa for the first five months, which drops to 2.35% once your introductory offer period ends.
  • ANZ Save offers 4.90% pa for balances less than $250,000 or 3.75% pa for balances above $250,000
  • NAB’s Reward Saver offers a 0.35% pa base rate plus 4.65% pa for each month that you make at least one deposit before the second last banking day and no withdrawals (for balances up to $49,999)
  • ING Savings Maximiser offers a 0.55% pa base rate plus 4.95% pa for each month you make a $1,000 or more deposit and five-card purchases for balances up to $100,000
  • Macquarie's Savings Account offers a fixed welcome rate of 5.35% pa for 4 months on balances of up to $250,000, which then drops to 4.75% pa for balances up to $1 million
  • NAB-backed Ubank offers a 0.10% pa base rate plus 5.00% pa if you deposit $200 per month for balances of up to $250,000

So which reigns supreme?

This will depend on factors like the amount you’re saving, your liquidity needs, and your ability to meet bonus interest criteria.

The savings accounts offer competitive interest rates but are subject to various conditions and balance caps. ING’s Savings Maximiser might offer up to 5.50% pa but if you forget to make the $1,000 deposit for two months (in a given year) – the rate will be reduced to 4.275% pa. Their standard variable rate is also only 0.55% pa for balances over $100,000.

Term deposits are relatively uncapped (Commonwealth Bank offers the above term deposit rates with a maximum limit of $2 million) and the 12-month term deposit is competitive (and might work in your favour if the RBA begins to cut interest rates). But of course, once you’re in, you can’t get out until the term is up.

Cash ETFs are also relatively uncapped and offer competitive rates with no conditions. However, if you’re purchasing these ETFs on a trading platform like Commsec (which charges 0.12% for transactions over $25,000) – You’re effectively sacrificing 0.24% to buy and sell. 

Alternatively, a platform like Stake charges $3.00 for transactions up to $30,000 (or 0.01% for the $30,000 transaction). 

Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

Kerry Sun
Content Strategist
Livewire Markets

Kerry is a content strategist at Market Index. He writes the Morning and Evening Wraps. He is an avid swing trader, drawn to technical set ups and breakouts.

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