It's easy to forget, but the ASX is home to exchange-traded funds (ETFs) that don't just invest in stocks. There are ETFs on our market that offer investments as diverse as government bonds, oil futures, private credit providers, and physical gold bullion. So it makes sense that you can invest in ETFs that hold only cash and cash equivalents on the ASX too.
Cash ETFs are a popular alternative to putting money in the bank yourself. These funds invest unitholders' money into a range of liquid, cash-based investments. These typically include deposits at major banks. As well as other money market instruments.
Some of the ASX's most popular cash ETFs include the BetaShares Australian High Interest Cash ETF (ASX: AAA) and the iShares Core Cash ETF (ASX: BILL).
Obviously, the appeal of these cash ETFs is going to fluctuate, depending on the investing climate. The appeal of cash is governed by various factors, such as interest rates, market fear, and greed.
As it happens, cash is seeing a surge of interest in 2025, if one report is to be believed.
ASX cash ETFs see surge in funds
According to a report from the Australian Financial Review (AFR), investors are currently pouring money into cash ETFs "at their fastest rate since the start of the COVID-19 pandemic".
The report cites a Bank of America survey. It reveals that cash holdings among global fund managers spiked from 3.5% in February to 4.1% in March, the biggest one-month jump since 2020.
Bank of America strategist Michael Hartnett was quoted as stating, "This month's decline is the largest since March 2020, and the seventh largest in the past 24 years, only surpassed by extreme bear sentiment observed around major market shocks".
This shift to cash has come at the cost of exposure to the share markets. These same investors have reduced their exposure to US stocks to their lowest level since June 2023.
Some of the capital has been redeployed to European stocks, amongst other assets, but cash is a main beneficiary of this trend.
It's not just this survey that reveals a renewed taste for cash amongst institutional investors, though.
The report also cites comments from ETF providers VanEck and BetaShares.
Arian Neiron, head of Asia-Pacific at VanEck, told the AFR that investors are using cash ETFs as an investment. But also as a stabling facility of sorts when moving capital between different asset classes:
Investors are recalibrating… They are pursuing, on a relative basis, other asset classes that present cheaper and more upside than the US market like emerging market equities, Europe, and gold bullion.
Meanwhile, Betashares told the AFR that cash accounted for 9% of ETF inflows in March so far, up from 2% in February and 1% in January.
