Markets can price businesses however they like. This pricing is fickle, though, and can change for no good reason. No one knows what kind of profits a business is going to bring in next month, next year or five years from now. And that makes pricing companies accurately extremely difficult.

As such, no business, whether it be Commonwealth Bank of Australia (ASX: CBA) or Ampol Ltd (ASX: ALD), can be relied upon to preserve your hard-earned dollars if you buy its shares. Nor can they be relied upon completely for dividend income. A company can only pay out dividends from the pool of profits that it amasses. Given that this pool of profits is impossible to anticipate with certainty, so too are any potential dividends derived from it.

Income-focused ASX ETFs that fund income from ASX shares, such as the Vanguard Australian Shares High Yield ETF (ASX: VHY), fall into the same bucket.

But there is one ASX ETF that investors can buy today that can promise capital preservation, as well as a truly reliable income stream. What's better, this ASX ETF is currently yielding about 4%, and could rise even further.

That ASX ETF is the BetaShares Australian High Interest Cash ETF (ASX: AAA).

A safe ASX ETF with a 4% yield?

AAA can promise capital preservation and income stability because it does not actually invest in ASX shares. Instead, it holds investors' capital in cash deposits in Australian banks. The fund then uses the interest it receives from these investments to pay income distributions to investors.

Historically, cash investments have not delivered nearly the same levels of returns that ASX shares have. However, I think the rather unique situation currently facing investors makes cash appealing right now. Despite the volatility we have seen on the share market over the last few months, the ASX remains fairly close to its record highs.

Dividend yields on the ASX's most popular shares remain depressed as a result. Popular income stocks like Telstra Group Ltd (ASX: TLS), Commonwealth Bank of Australia (ASX: CBA) and Wesfarmers Ltd (ASX: WES), to illustrate, currently trade on dividend yields well under 4%.

In contrast, this ETF's last monthly distribution (yes, it pays out monthly) came in at 17.2 cents per unit. Annualised, that would give AAA a distribution yield of 4.12%. The only factor that can really affect this ETF's yield is interest rates. And with rates rising in May, and possibly again before the end of the year, this looks like a pretty compelling option for anyone investing for income today.

The post A surprising ASX ETF that yields 4% and pays out monthly appeared first on The Motley Fool Australia.

So today, let's talk about three ASX dividend stocks that I think are worth considering if one wants to build a winning income portfolio. All three come with a trailing dividend yield of at least 4%.

3 ASX dividend stocks to consider for 2026

Woodside Energy Group Ltd (ASX: WDS)

Woodside is the ASX's largest oil and gas company and a formidable dividend stock. Like most ASX energy shares, Woodside has had a phenomenal year so far, share price-wise, for obvious reasons. Yet the company still trades on a compelling dividend yield of well over 4% at recent pricing.

No dividend is ever guaranteed to continue from one year to the next, particularly that of an energy stock. But with oil prices continuing to trend higher, I think Woodside could be a valuable source of income, as part of a diversified income portfolio, for a while yet.

National Australia Bank Ltd (ASX: NAB)

ASX bank stocks have always been lucrative sources of dividend income. Right now, I think NAB is the pick of the bunch. This ASX dividend stock's superlative business banking dominance has always given it a bit of an edge against the other banks in my eyes, anyway. And, unlike Commonwealth Bank of Australia (ASX: CBA) shares, NAB still offers a dividend yield without a '2' at the front. It's currently well over 4%.

Investors can thank the near-20% drop NAB shares have endured over the past three months or so for that rather decent dividend. Unlike ANZ Group Holdings Ltd (ASX: ANZ) shares, NAB's dividends still come with full franking credits attached as an added bonus.

BetaShares Australian High Interest Cash ETF (ASX: AAA)

As most Australians would know, interest rates are rising, and, if the markets are to be believed, seem set to keep rising. Yes, this is painful for mortgage-holders. But there's a silver lining to the cloud of higher rates in the form of greater returns on cash investments. Unlike ASX shares, cash investments are effectively risk-free. Investors can use exchange-traded funds (ETFs) to take advantage of that.

One such fund is the BetaShares Australian High Interest Cash ETF. AAA units represent investments in cash deposits at major Australian banks. According to the provider, this ETF is currently yielding a competitive 4.19%. That's a dividend-like return (albeit without franking) without the risks of an ASX share. Or the potential growth, to be fair. Even so, I'd wager that many ASX dividend stock investors looking for reliable income in 2026 will appreciate it.

The post 3 ASX dividend stocks with 4% yields to buy for a winning income portfolio appeared first on The Motley Fool Australia.

The benchmark index rose 2.2% this month despite peace negotiations between the US and Iran stalling and oil prices continuing to surge.

The Brent Crude oil price rose 8.8% during April to trade above US$113.50 per barrel today, its highest level since 2022.

The Strait of Hormuz remains shut down, and the global fuel supply crisis worsens by the day.

We saw the impact in yesterday's Australian inflation data, with automotive fuel prices spiking 33% in March alone.

This contributed to annual inflation rising from 3.7% over the 12 months til the end of February to 4.6% in March.

This is well outside the Reserve Bank's target band of 2% to 3%.

The market is now pricing in a 69% chance of a third interest rate increase for 2026 in Australia next week.

What's happening with the Iran war today?

There are reports that the US military will brief US President Donald Trump on potential further action against Iran.

This follows the President's rejection of Iran's latest peace proposal.

Trading Economics analysts summarised the situation:

Trump … reaffirmed that the US will maintain its naval blockade until a nuclear agreement is reached, further weakening prospects for a diplomatic resolution.

Iranian authorities warned of retaliation if the blockade continues, accusing Trump of attempting to force Tehran into submission through economic pressure and internal destabilization.

Amid this uncertainty and fears of a global recession, here are the ASX shares and ETFs that investors bought and sold most this month.

Most bought ASX shares in April

The following ASX shares and ETFs were the most bought by investors using the Bell Direct trading platform this month.

The rankings are based on order of net value of buy orders, minus sell orders, placed by Bell Direct customers.

Source: Bell Direct

Most sold ASX shares this month

Source: Bell Direct

The post Top 10 ASX shares bought and sold in April appeared first on The Motley Fool Australia.

This portfolio spreads investments across thousands of companies worldwide, multiple sectors, and defensive assets while maintaining very low fees.

Many long-term Australian investors use a structure like this with multiple ASX ETFs. Let's have a closer look.

Vanguard Australian Shares Index ETF (ASX: VAS)

This ASX ETF forms the income backbone of the portfolio.

VAS tracks the S&P/ASX 300 Index (ASX: XKO), giving investors exposure to hundreds of Australia's largest companies. The ETF is heavily weighted toward financials and resources. They have historically been two of the most resilient sectors in the Australian economy.

Major holdings include blue-chip shares such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), and CSL Ltd (ASX: CSL).

These companies generate enormous cash flows and tend to keep paying dividends even during economic downturns. This income stream, often boosted by franking credits, can be especially valuable when markets become volatile.

With a management fee of around 0.07%, this ASX ETF is also one of the most cost-effective ways to gain broad Australian market exposure.

Suggested allocation: 35%

Vanguard MSCI International Shares ETF (ASX: VGS)

This ASX ETF adds global diversification and long-term growth potential.

VGS holds more than 1,300 companies across developed markets, with strong representation in the United States, Europe, and Japan.

Its largest positions include global technology and consumer giants such as Apple Inc (NASDAQ: AAPL) and Nvidia Corp (NASDAQ: NVDA).

These companies dominate global industries and possess enormous balance sheets and pricing power. Many continued expanding during past crises such as the global financial crisis and the pandemic.

This ASX ETF reduces reliance on the Australian economy while providing exposure to sectors underrepresented on the ASX, particularly global technology and innovation.

Suggested allocation: 35%

VanEck FTSE Global Infrastructure ETF (ASX: IFRA)

This VanEck ASX ETF invests in global infrastructure companies, including utilities, pipelines, transport assets, and communication towers. Infrastructure businesses tend to generate stable and predictable cash flows, which is why they are commonly used as defensive holdings in investment portfolios.

The ASX ETF tracks the FTSE Global Core Infrastructure Index and focuses primarily on utilities, energy infrastructure, and transport assets worldwide. It is currency hedged to the Australian dollar, and the management fee is around 0.20%.

Infrastructure ETFs can work well in a recession-focused portfolio because the services they provide are essential to the functioning of the economy. Revenues are often contracted or regulated. This helps provide greater predictability, and cash flows are generally more stable than those of typical equities.

Suggested allocation: 20%

BetaShares Australian High Interest Cash ETF (ASX: AAA)

The BetaShares Australian High Interest Cash ETF provides the defensive buffer.

Unlike equity ETFs, AAA invests in high-interest bank deposit accounts. This means its value tends to remain stable while generating interest income linked to Australian cash rates.

During severe market sell-offs, this allocation can reduce overall volatility. It also provides liquidity that investors can deploy into equities at lower prices.

Having a small cash allocation can also make it psychologically easier to stay invested during major market downturns.

Suggested allocation: 10%

The post 4 ASX ETFs to ride through recessions and market crashes appeared first on The Motley Fool Australia.

There are a wide variety of assets that we can own to generate passive income, such as shares, property, and term deposits.

However, with the costs involved in holding residential property, I don't think residential rental income in a city will unlock strong (or even positive) cash flow.

But, there are a few other passive income streams that can be very appealing.

Dividends

For me, the best passive income Aussies can buy is fully franked dividend income.

Any company can pay a dividend, whether it is Australian, American, Canadian, British, European, or other. A dividend is when the business shares some of its profit with shareholders.

Companies try to earn a profit every year, and they don't necessarily need to hold onto/invest all of that profit to grow earnings in the following year. Depending on the valuation and the dividend payout ratio, some businesses can offer very pleasing dividend yields.

Australian residents have a particular advantage over foreigners when it comes to owning Australian companies. Franking credits are refundable credits generated when Australian companies pay income tax. Those franking credits attached to dividend payments boost the company's after-tax dividend yield.

Some of the businesses I like for full franking are Telstra Group Ltd (ASX: TLS), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), and MFF Capital Investments Ltd (ASX: MFF). Part of the reason why I like these businesses is that they are regularly increasing their payouts.

Distributions

Dividends are not the only passive income that ASX shares are sending to investors.

Businesses that operate in a trust structure – which is different to a company – send out distributions to investors.

Real estate investment trusts (REITs) and exchange-traded funds (ETFs) both operate in trust structures, and they pay distributions.

I like REITs because commercial property usually offers a much higher yield than residential property, and it can still provide a pleasing mixture of income stability and growth. Some of the REITs I like include Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), and Charter Hall Long REIT (ASX: CLW), which all have solid starting yields.

Term deposits for passive income

Term deposits can be an appropriate place to park money if Aussies don't want to take on any risk with that money. Despite a couple of RBA cash rate cuts this year, we can still get a decent interest rate. I think it's better to earn interest from a term deposit than the cash sitting in a low/no interest account, if that money isn't needed in the immediate future.

For investors who don't want to hunt down which term deposit is the best, they could utilise the ASX ETF Betashares Australian High Interest Cash ETF (ASX: AAA). Its money is spread across several financial institutions in Australia, including (currently) Bank of Queensland Ltd (ASX: BOQ), National Australia Bank Ltd (ASX: NAB), and Bendigo and Adelaide Bank Ltd (ASX: BEN).

The current cash yield, net of fees, is 3.93%.

But, I prefer ASX dividend shares because of their ability to pay a higher yield and deliver growth, which is what I'm regularly on the lookout for.

The post The best passive income streams to help fund your future appeared first on The Motley Fool Australia.

This is a significant milestone for the exchange-traded fund (ETF) provider, which launched its first two products, the BetaShares Australian Resources Sector ETF (ASX: QRE) and the BetaShares Australian Financials Sector ETF (ASX: QFN), in 2010. Today, BetaShares offers more than 100 products across Australia and New Zealand.

Along with announcing this news, BetaShares disclosed investor preferences and trends for the year to date.

Interestingly, investors have been spreading funds roughly evenly across BetaShares' top three asset classes. International equities focused funds have attracted 33.4% of new funds, while 30.7% has been invested in Australian focused ETFs and 27.2% in fixed income ETFs.

The ASX ETF provider also revealed its top 5 most popular funds.

BetaShares Australia 200 ETF (ASX: A200)

The BetaShares Australia 200 ETF is one of BetaShares' flagship funds. As of June 2024, it was the ETF providers' most popular fund, with $7.1 billion in assets under management. The A200 ETF tracks the S&P/ASX 200 Index (ASX: XJO), providing investors with exposure to the 200 largest listed companies on the ASX. It has an ultra-low management expense of 0.04%, which is especially appealing to investors. A200 is up 42.2% over the past 5 years, which (as expected) is in line with the ASX 200 Index.

BetaShares Nasdaq 100 ETF (ASX: NDQ)

The BetaShares Nasdaq 100 ETF is the ASX ETF providers' second most popular fund. It has $5.8 billion in assets under management. For a management expense of 0.48%, NDQ ETF invests in the 100 largest non-financial companies listed on the Nasdaq. The higher management fee (relative to the A200 ETF) has been well worth it for investors, with the NDQ ETF returning 112.1% over the past 5 years

BetaShares Australian High Interest Cash ETF (ASX: AAA)

The BetaShares Australian High Interest Cash ETF is the ETF provider's third most popular fund, boasting $4.4 billion in assets under management. The AAA ETF provides exposure to Australian bank deposits, with distributions that exceed the 30-day Bank Bill Swap Rate (BBSW). Its management expense is relatively low at 0.18%. As of June 2025, this ETF offered a trailing yield of 4.4%. Distributions are paid monthly. As expected for a cash investment, the AAA ETF is flat over 5 years.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

The BetaShares Global Sustainability Leaders ETF is BetaShares' fourth most popular ASX ETF. For a management expense of 0.59%, the ETHI ETF invests in a portfolio of large global stocks identified as "Climate Leaders". Such companies have been screened for significant exposure to fossil fuels or engaged in activities deemed inconsistent with responsible investment considerations. Over the past 5 years, ETHI has increased by 51.3%.

BetaShares Australian Hybrids ETF (ASX: HBRD)

The BetaShares Australian Hybrids ETF is the ETF provider's fifth most popular ASX ETF. Managed by fixed income fund manager Coolabah Capital, HBRD invests in Australian Bank hybrids, hybrids from other issuers, and other fixed income securities. It has $2.4 billion assets under management. As of June 2025, the 12-month distribution yield was 6.5%, making it especially attractive for those after passive income. Distributions are paid monthly. Its management expense is 0.55%, which is relatively low for an actively managed ETF.

The post BetaShares reaches $50 billion FUM: What are their 5 most popular ASX ETFs? appeared first on The Motley Fool Australia.

Interest rate cuts are often universally celebrated in the media. However, they might not be welcomed by all Australians.

Falling interest rates do mean cheaper mortgages and loans. But lower rates also mean that the interest investors and savers can enjoy from cash investments like savings accounts and term deposits drops too.

This can be a hard pill for many investors, particularly those who are retired, to swallow. These investors often hold a significant amount of capital in bank accounts and term deposits, thanks to the safety and capital protection that they offer. For those Australians who are no longer working, this protection is important, as they are not always comfortable holding the vast majority of their capital in the share market.

So, what could be the top places to park your cash following the RBA's interest rate cut last week?

Interest rate cut: Where to get the best bang for your buck?

Well, to start with, this isn't 2021. You can still get a term deposit offering a decent yield in 2025, just not quite at the levels we saw at the start of the year. To illustrate, today, you can obtain a 12-month term deposit with an interest rate as high as 4.5% from select providers. You'll have to look outside the big four banks, though.

For 24-month deposits or longer, the top rate you could expect from the current market is around 4.3%.

Even longer than that, though, and rates start dropping fast. The best rate for a three-year term is about 4.1%. For a five-year term, you'd be lucky to get anything over 3.75% per annum.

There are other options, though.

You could look at a cash exchange-traded fund (ETF). These investments hold cash assets as part of an underlying portfolio. Often at slightly higher interest rates than retail banking products.

For example, the BetaShares Australian High Interest Cash ETF (ASX: AAA) currently offers an interest rate of 3.94% per annum and a 12-month dividend distribution yield of 4.4%. The iShares Core Cash ETF (ASX: BILL) has a similar story. It currently offers a trailing yield of 4.36%.

If an investor were willing to depart from cash and consider a bond ETF, the returns could be marginally higher again. An example might be the BetaShares Australian Bank Senior Floating Rate Bond ETF (ASX: QPON). Holding bonds issued by our major banks, this ETF is currently sitting on a running yield of 4.78% per annum. That's with an estimated yield to maturity on its underlying investments of 4.32%.

The post The top places to park your cash following the RBA's rate cut appeared first on The Motley Fool Australia.

Investors may have accumulated cash by selling down existing investments or saving their wages. They may be looking to buy shares, but waiting for lower prices. Alternatively, they may wish to take some time to do more research. 

During this period, it's important to consider where to keep their cash. With the cash rate still at 4.10%, there are many options to earn an attractive return while they wait to invest in the stock market. These include savings accounts, transaction accounts, term deposit and cash exchange-traded funds (ETFs).

Maximise returns and flexibility with ASX cash ETFs

Term deposits, where an investor's money is locked away for a fixed period, typically offer superior returns to traditional savings or transaction accounts. While several term deposits in Australia offer up to 4.95% interest, they often come with restrictive conditions. This can cause investors to receive a return that is much lower than the advertised rate. 

For example, sometimes, higher interest rates are only available for balances over a certain amount. 'Honeymoon rates', whereby higher interest rates are offered for a short period before switching to a lower rate, are also common. Additionally,  penalty interest may be charged if the funds are withdrawn before the end of the defined term deposit period. This can be very restrictive for investors wanting to withdraw cash to buy shares when an opportunity arises.

ASX cash ETFs, which are traded on the ASX like shares and other ETFs, overcome many of these disadvantages. Most importantly, like all ETFs, they are extremely liquid investments that can be bought or sold at any time during market trading hours. This allows investors to redeem their investment at any time without incurring a penalty.  

Investors looking to generate an attractive return with low-risk exposure while avoiding the disadvantages of term deposits should consider the following two ETFs.

BetaShares Australian High Interest Cash ETF (ASX: AAA)

BetaShares Australian High Interest Cash ETF provides exposure to Australian bank deposits, with distributions that exceed the 30-day Bank Bill Swap Rate (BBSW). Unlike a term deposit, there is no need to open a bank account to make this investment. As of 28 February 2025, this ETF offered a trailing yield of 4.4%. Distributions are paid monthly. Its management expense is relatively low at 0.18%. Those wanting to maximise flexibility with their cash investments while locking in an attractive return should consider this ETF.

iShares Core Cash ETF (ASX: BILL)

iShares Core Cash ETF tracks the performance of the S&P/ASX Bank Bill Index. With 58 holdings, it provides exposure to a diversified portfolio of short-term money market instruments. The fund is extremely liquid, holding only investments that can be sold on a same-day basis. As of March 2025, the yield was 4.43%. Like BetaShares Australian High Interest Cash ETF, it also pays monthly distributions. However, its management fee is lower at just 0.07%. 

The post Looking to set aside cash for buying opportunities? Maximise returns and flexibility with ASX cash ETFs appeared first on The Motley Fool Australia.

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.

The post Who is buying ASX Cash ETFs this month? appeared first on The Motley Fool Australia.

Whilst 2024 has been a phenomenal year to own ASX shares, many investors, not to mention prospective investors, might be feeling queasy about buying in right now. Given the above-average gains this year has already brought us, and all.

After all, higher ASX share prices, particularly from expanding price-to-earnings (P/E) ratios, translate into higher risk for new buyers.

But don't take it from me. Take it from legendary investor Warren Buffett, who once said this:

Whether we're talking about stocks or socks, I like buying quality merchandise when it is marked down.

He also once stated:

The three most important words in investing are 'margin of safety.'

The vast majority of quality ASX shares are most certainly not marked down right now. And that means that finding a top-shelf company with a margin of safety is a very difficult task indeed.

But ASX investors shouldn't despair.

How to invest when ASX shares are at record highs

For one, index investing, particularly through a dollar-cost averaging strategy, has proved to be an effective path to accumulating wealth through all kinds of markets.

If you are a long-term investor, I think you can still feel confident in periodically investing in a cheap, diversified index fund, even at current prices. But make sure you continue to buy with the same gusto next time there is a stock market correction or crash. This strategy doesn't work very well if you only 'buy high'.

But if you can't stomach putting any more capital into the stock market right now, there are still plenty of alternatives.

There's always that great Australian pastime – buying property – to consider. However, I acknowledge that this isn't an easy alternative for most readers.

That's why you might want to take advantage of the current high interest rate environment. Most Australians would be aware that interest rates are currently at decade-highs. While this has caused a lot of economic pain for many Australians, high rates do come with a silver lining.

Cash and offset accounts can balance ASX shares

Interest rates on savings accounts and term deposits haven't been as high as they are today in many years. You can easily put your money in the bank (savings account or term deposit) and secure an interest rate of at least 5% right now.

That's a 5% return with zero risk (up to $250,000 anyway). Most of the popular ASX dividend shares are presently offering much less than 5% in yield today, thanks to rising share prices. To illustrate, Commonwealth Bank of Australia (ASX: CBA) stock will only get you a 2.94% trailing yield right now.

As such, if you value capital preservation, a term deposit might be a good alternative to shares in the current environment. If you don't want to use a term deposit or a savings account, a good ASX alternative is a cash exchange-traded fund (ETF) like the BetaShares Australian High-Interest Cash ETF (ASX: AAA) or the iShares Core Cash ETF (ASX: BILL).

Alternatively, if you already have a mortgage on a property, you might want to take advantage of an offset account. With high interest rates, an offset account can help you benefit from holding cash but without paying those pesky taxes on interest earned at the bank.

Remember, holding a dollar in an offset account attached to a 7% mortgage will net you a real return of 7% on that dollar every year until the mortgage is paid off.

Don't forget about bonds

If you don't have a mortgage, another alternative to the share market that has the potential to deliver some reasonable returns is bonds. It's difficult for most ordinary investors to invest in government or corporate bonds directly. However, once again, ASX ETFs provide an avenue.

For example, the Vanguard Australian Fixed Interest ETF (ASX: VAF) and the iShares Core Composite Bond ETF (ASX: IAF) are two popular options. Both offer yields of between 2-3% right now, and could increase in value if interest rates start falling.

Foolish takeaway

The recent record highs of the share market are certainly something to take into account if you have money to invest right now.

But don't despair. This is not 2021, and there are many alternatives to the share market if you're looking for real yield but are not comfortable with the recent highs.

The post Concerned about ASX shares at all-time highs? Don't worry, you've got options appeared first on The Motley Fool Australia.

Our golden years will hopefully be the best years of our lives, and our nest egg is probably one of the most important elements for funding our living expenses after we stop working.

The ASX share market is regularly volatile, so that shouldn't come as a surprise to anyone. However, real-life downturns and recessions can occasionally happen.

The retirement phase may last decades, so it's crucial to be well-prepared for whatever may happen and how long we may live.

An emergency fund can protect retirees

I believe every adult in Australia should have an emergency fund. We never know when an emergency will happen, so having that financial foundation can be useful if an issue arises. For young Aussies, I'd suggest having at least $1,000 in a high-interest savings account, and for the breadwinners of a family, I'd suggest having three to six months of living expenses as cash.

Retirees need to have cash saved to ride out a downturn. Selling assets such as ASX shares during a period of falling share prices could be very detrimental to the nest egg fund.

Financial planners can help figure out how much a retiree should have as cash set aside, but I'd suggest an amount equivalent to at least a year of living expenses, perhaps up to two years, if the savings account is earning a good interest rate.

On the ASX, there is an exchange-traded fund (ETF) called Betashares Australian High Interest Cash ETF (ASX: AAA). This ETF allocates money into deposit accounts with selected banks in Australia. It pays interest monthly at a rate that's competitive with 'at call' bank deposits. However, an investment in this ETF does not have any government guarantee. The current interest rate on the AAA ETF is 4.45%. This ETF may appeal to investors with significant cash balances or non-individual entities.

Growing investments

The other ASX investment that I think every retiree should have is investments that are growing.

We may need our portfolios to last a really long time, perhaps three or four decades. In the last three years, we've seen how inflation can degrade the value of a dollar, and the costs of various products and services have jumped significantly. Protecting against long-term inflation is a good idea.

I like the idea of investing in assets that can deliver long-term growth without us having to worry about or monitor them, which is often why diversified ETFs can be so appealing. However, some ETFs don't offer an adequate level of passive income due to their dividend yield or dividend growth.

Some of my favourite investments for dividend and earnings growth are Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), and Collins Foods Ltd (ASX: CKF).

Of course, ETFs like Betashares Global Quality Leaders ETF (ASX: QLTY) and VanEck MSCI International Quality ETF (ASX: QUAL) can be very effective, too; they just don't have large dividend yields.

The post 2 ASX investments I think all retirees should have appeared first on The Motley Fool Australia.

There are a variety of different ways to gain passive income, and we can find them on the ASX. Each of these methods can create income, though I'd suggest ASX companies will deliver the biggest yields.

Interest from cash

Typically you would have to go to a bank or credit union to get a financial product that pays interest from a cash deposit. But, on the ASX, there's an option that takes investor money and spreads it across a number of term deposits at financial institutions in Australia.

Betashares Australian High-Interest Cash ETF (ASX: AAA) is the ASX investment that does just that. Its bank holdings include National Australia Bank Ltd (ASX: NAB), Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Ltd (ASX: BOQ).

The ETF pays the income monthly. At the moment, the interest rate is 4.45%.

Bonds

Owning bonds can be another form of passive income. Bonds are basically debt from a government or business. The borrower pays interest to the investors.

While investors can probably get a higher return from bonds focused on businesses, I'd prefer to focus on government bonds because, typically, they are safer.

Vanguard Australian Government Bond Index ETF (ASX: VGB) invests in Australian government bonds. The yield to maturity for this was around 4% on 31 December 2023.

Property

Property is a favourite asset class of many Aussies – and we can buy ASX shares that give exposure to property.

Real estate investment trusts (REITs) allow us to buy pieces of a business that have a portfolio of commercial property.

They pay out a large proportion of the net rental profit each year, creating a pleasing source of annual passive income.

I'll mention the yields of a couple of my favourite REITs based on the projected payouts on Commsec.

For example, farm REIT Rural Funds Group (ASX: RFF) could pay a distribution yield of 5.7% and Centuria Industrial REIT (ASX: CIP) might pay a distribution yield of 4.9%.

Shares in ASX companies

One of the best things about ASX companies is that when they pay fully franked dividends, the franking credits boost the yield. For example, a 3.5% normal dividend yield becomes a grossed-up dividend yield of 5%, or a 7% yield can become a grossed-up dividend yield. Investors get the benefit of the credits when they do a tax return.

There are a number of larger ASX shares that have a history of paying sizeable and attractive dividends, such as Telstra Group Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES) and Coles Group Ltd (ASX: COL).

Some companies have grown their dividends for many years in a row, including Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and Sonic Healthcare Ltd (ASX: SHL).

I'll also point out that listed investment companies (LICs) – which own a diversified portfolio of shares – can make investment returns and pay dividends to shareholders.

One of the most attractive things to me is that companies can both pay good dividends and achieve profit growth as they invest for more long-term growth. For example, Wesfarmers is a much bigger business than it was 15 years ago, and it's paying a much bigger dividend.

Organic growth of dividends means that, over time, companies can deliver higher passive income than interest options and achieve capital growth.

$1,000 per month of passive income

Earning $1,000 per month translates into an annual passive income of $12,000 per year.

It depends on the yield for how much we'd need to make that much. With an 8% dividend yield, it'd take a portfolio value of $150,000.

A 5% yield would need a portfolio value of $240,000, and a 4% dividend yield would take a value of $300,000. But, lower yields may be safer and/or deliver stronger growth over time.

It might take a fair bit of time to reach a portfolio value of those amounts, so investing in ASX shares that could deliver good growth along with dividends would be prudent, particularly for younger Aussies.

The post How can I make $1,000 a month from ASX shares? appeared first on The Motley Fool Australia.

For readers who don't know what a dividend is, it's when a company pays out some (or all) of the profit to shareholders. If the company hasn't made a profit this year and has no retained profit from previous years, then it can't pay a dividend.

There are two main reasons why I think ASX dividend shares could be a great option.

Better yield

Interest rates have increased significantly, so investors can now get a stronger return from cash, bonds and some other assets. But, I still think dividends are better.

There are numerous ways to invest for generating interest, but let's look at two ideas on the ASX.

Betashares Australian High Interest Cash ETF (ASX: AAA) gives exposure to a variety of cash deposits from a mixed group of banks. It has a current interest rate of 4.45%.

The Vanguard Australian Government Bond Index ETF (ASX: VGB) gives exposure to a portfolio of bonds from a variety of different Australian government entities. It has a yield to maturity of 4.40%.

Private commercial property can offer a better gross yield, but debt now costs a lot more (which reduces the rental profit) and there could be a reduction in property values because of the impact of higher interest rates.

Dividends are not guaranteed, but some dividend yields can be very pleasing. The yield is determined by a combination of the dividend payout ratio and the valuation (like the price/earnings (P/E) ratio).

Some ASX dividend shares can offer very good dividend yields, though exceptionally higher yields aren't necessarily better for longer-term dividend income. As a bonus, dividend investing Aussies can benefit from franking credits which can provide an after-tax boost to Australians after doing their tax return.

Using their FY23 payouts, Telstra Group Ltd (ASX: TLS) has a grossed-up dividend yield of 6.1%, Wesfarmers Ltd (ASX: WES) has a grossed-up dividend yield of 4.8%, Coles Group Ltd (ASX: COL) has a grossed-up dividend yield of 5.8% and Medibank Private Ltd (ASX: MPL) has a grossed-up dividend yield of 5.9%.

There are other bonds with higher yields, but they lack the second key reason why dividend investing can work well for ASX income seekers.

Growth

One of the best reasons to like ASX dividend investing in shares is they can achieve profit growth.

A company will do its best to grow its profit over time. Last year's profit enabled the latest dividend payments, and if a company can increase its profit, it can pay a bigger dividend the following year.

Higher profit may also mean investors value that business more highly, sending the share price higher.

A good business can pay dividends, grow the dividend over time and deliver capital growth for shareholders.

An Australian income-seeker can spend their entire dividend payment and still get a bigger payment next time (or reinvest it and supercharge the passive income growth).

Savers with money in the bank have to keep the interest generated in the bank to earn more next time, while bonds don't grow profit (except for interest rate changes).

Companies like Wesfarmers, Sonic Healthcare Ltd (ASX: SHL) and Brickworks Limited (ASX: BKW) have a history of growing their dividend regularly, though growth isn't guaranteed. There are plenty of other ASX dividend shares out there with good records.

The post Dividend investing: A proven path for Australian income seekers appeared first on The Motley Fool Australia.

While that makes paying off the mortgage pretty tough, it also means that the income we can receive from cash assets like savings accounts and term deposits is also at a decade-high.

Term deposits vs ETFs

Saying that, you still have to extensively shop around for the best interest rates for your savings. Accounts and term deposits that are offered by the big four banks, including Commonwealth Bank of Australia (ASX: CBA) are rarely the best on the market. And even if you do find a market-beating cash asset, chances are it will come with conditions attached.

This could be a requirement that you tap your card a certain amount of times. Or else you make no withdrawals in the month you want to receive your full interest rate.

It's for that reason that many investors who wish to seek the safety of cash might like to consider a cash ASX exchange-traded fund (ETF).

Yes, these cash-based ETFs do trade on the stock market. But they are not shares, and do not represent an investment in shares. As such, they don't come with the same sort of volatility that cash investors might be seeking to avoid by keeping their money in the bank. However, they do still come with those same interest rates we can enjoy on our savings accounts and term deposits. And sometimes even better.

Both of the funds I discuss below are designed to be completely liquid. This means that (unlike a term deposit) you can sell out of them at a moment's notice. It will also be worth taking a look at their unit prices, so you can see how involatile they are compared to your traditional shares.

2 ASX cash ETFs to consider today

BetaShares High Interest Cash ETF (ASX: AAA)

This ETF form provider BetaShares allows investors access to a portfolio of cash assets that are "invested in deposit accounts held within selected banks in Australia".

The AAA ETF pays out dividend distributions monthly, and currently has a running interest rate of 4.44%. That's with a trailing distribution yield of 3.6% over the past 12 months.

It charges a management fee of 0.18% per annum.

iShares Core Cash ETF (ASX: BILL)

Another option to consider is this offering from BlackRock. Similarly, the iShares Core Cash ETF offers monthly distributions. It works slightly differently to Betashares AAA, offering cash assets as well as short-term money market instruments among both Australian and international banks.

The BILL ETF has a present running interest rate of 4.43% and has yielded 3.7% over the past 12 months. This fund charges a management fee of 0.07% per annum.

The post These cash ASX ETFs could be better than your bank account appeared first on The Motley Fool Australia.

In fact, there are several different types of income sources that investors could consider, but let's rule out one right from the start.

For me, residential property is not the greatest place to look for passive income right now. The rental yield is low, considering where the RBA interest rate is now. Plus, the cost of debt is now higher, so it's even more costly to own a negatively geared property.

I'd say there are three other areas of passive income to invest in that currently look more attractive.

1. Savings accounts and term deposits

Most banks now offer much better returns on their savings products, whether we look at Commonwealth Bank of Australia (ASX: CBA), Macquarie Group Ltd (ASX: MQG) or a smaller operator like MyState Limited (ASX: MYS).

Some accounts now offer a rate higher than 5%, so be sure to shop around to find a good bank that can offer a good return. It's useful to be able to receive this level of return in perhaps the safest way. Even bond prices can go up and down.

On the ASX, there is an exchange-traded fund (ETF) that gives investors exposure to Australian cash deposits. Betashares Australian High-Interest Cash ETF (ASX: AAA) does not have any government guarantee, but it's spread across a number of banks. These include National Australia Bank Ltd (ASX: NAB), Bendigo and Adelaide Bank Ltd (ASX: BEN), Bank of Queensland Ltd (ASX: BOQ), Rabobank, Bank of Tokyo-Mitsubishi UFJ, JP Morgan Chase and Citi.

The current interest rate is 4.43% as of 8 November 2023.

2. Commercial property

I think an investment in commercial property can also be a great way to generate passive income because it typically produces a good yield — whether that's in logistics warehouses, farms, healthcare or another category.

But I'd want to look at property with a good chance of rental growth that matches or beats inflation over the long term.

There are plenty of options on the ASX where we can gain distributions from a real estate investment trust (REIT) that owns the property.

Two of my favourites are farmland landlord Rural Funds Group (ASX: RFF) and industrial property business Centuria Industrial REIT (ASX: CIP). Both are seeing ongoing rental growth.

3. ASX dividend shares

And finally, there are plenty of companies on the ASX that pay dividends to investors, which can be an attractive source of passive income.

Australian companies that come with the extra benefit of franking credits can boost after-tax returns.

Some ASX dividend shares may have high yields, while others have lower yields but can deliver long-term growth.

ASX companies that intend to regularly grow the dividend for investors include Bunnings owner Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS), Sonic Healthcare Ltd (ASX: SHL) and Brickworks Limited (ASX: BKW).

These are among the ASX dividend shares I think could be compelling longer-term picks.

The post 3 passive income streams that could actually work! appeared first on The Motley Fool Australia.

While the hike has fuelled angst in many sectors of the economy, there is a swathe of ASX shares that are benefiting from the higher interest rate environment. Certainly, they could be interesting investments to consider.

I like taking advantage of ASX share valuations that have fallen. But there's also the potential for a handful of names to actually make greater returns because of the higher rate environment.

The current prices need to make sense, but I like the look of these three ASX shares.

Betashares Australian High Interest Cash ETF (ASX: AAA)

This is an exchange-traded fund (ETF) that gives investors exposure to Australian cash deposits with "attractive monthly income distributions that exceed the 30-day Bank Bill Swap Rate (BBSW) (after fees and expenses)", according to the fund. Its annual fee and costs are 0.18% per annum.

The ETF is invested in deposit accounts held with select banks in Australia. However, note that — unlike bank deposits — this investment does not receive any government guarantee. At the moment, some of the fund's banks include National Australia Bank Ltd (ASX: NAB), Bendigo and Adelaide Bank Ltd (ASX: BEN), and Bank of Queensland Ltd (ASX: BOQ).

At the time of writing, the interest rate earned on the AAA ETF's deposits, net of costs, was 4.19% as at 7 November 2023. I suspect the RBA's latest move will increase this rate of return.

Insurance Australia Group Ltd (ASX: IAG)

IAG is one of the largest insurers in Australia, with a number of brands including NRMA Insurance, CGU, SGIO, SGIC, Swann Insurance, WFI, and Lumley Insurance.

The ASX share is benefiting from a number of different factors at the moment. Widespread inflation is helping the company pass on strong premium increases. If IAG's margins don't change, then an increase in revenue should lead to a boost in the company's net profit after tax (NPAT).

As well, a change in the weather pattern from La Nina (wetter with regular damaging storms) to El Nino (drier) may also help the company's profitability.

Where do higher interest rates come in? IAG invests the premium money it receives until it's needed to be paid out. A substantial portion of that is invested in assets that generate interest, so a higher interest rate should translate into stronger interest earnings for IAG.

Computershare Ltd (ASX: CPU)

This ASX share provides a variety of different services including share registry, employee equity plans, stakeholder communications, corporate governance, fund services, deposit protection, and mortgage servicing. It now manages over 75 million customer records with 14,000 staff.

As part of the company's operations, it holds a significant amount of cash for clients. With that, the company can earn a lot of extra income (and profit). At the time of Computershare's FY23 presentation, it said that FY24 margin income guidance was $840 million.

Since 18 October 2023, the Computershare share price has fallen by around 10% so it's cheaper at the moment and it can likely generate better interest returns after the RBA rate increase.

Foolish takeaway

I like the simplicity of the AAA ETF, particularly for people/entities who can't access the best rates offered by banks.

In a rising interest rate environment, I'd still prefer to go for ASX share investments that have fallen and could be cyclical opportunities if they rebound once economic conditions normalise. That said, the above three names look set to benefit from the higher interest rate environment.

The post Where I'd invest in ASX shares to take advantage of higher interest rates appeared first on The Motley Fool Australia.

Investment choices can provide insights into the mood of different investor demographics.

Data from broker Selfwealth Ltd (ASX: SWF) has revealed where investors have been putting their money in FY24 to date, from 1 July 2023 to 7 August 2023.

Most popular trades

Selfwealth has provided a list of ASX shares and investments that millionaire millennials have been trading in. It's sorted by the number of trades rather than the number of units or value of trades so that a few rich investors don't skew the results with large trades.

That said, here are the ASX investments with the most amount of trades:

BetaShares Geared Australian Equity (Hedge Fund) (ASX: GEAR) is an exchange-traded fund (ETF) that's betting on the S&P/ASX 200 Index (ASX: XJO) to rise. It borrows money to amplify the gains (and losses) made by the portfolio. Current gearing is 57%, which to some people may not be a comfortable level of borrowing for their own portfolios.

Global X Ultra Long Nasdaq 100 Hedge Fund (ASX: LNAS) is invested in 100 of the largest businesses on the NASDAQ 100 stock exchange while utilising futures contracts.

BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) is an ETF that enables investors to bet that the ASX 200 is going to fall by using futures. It uses leverage, which amplifies the returns and losses. Since its inception in April 2015, the ASX ETF has delivered an average return per annum of negative 20.3% to June 2023.

Vanguard Australian Shares Index ETF (ASX: VAS) is an ETF focused on 300 of the largest ASX shares.

BetaShares Crypto Innovators ETF (ASX: CRYP) is an ETF that's invested in global companies that provide exposure to the cryptocurrency economy. In this portfolio are names like Marathon Digital Holdings, Riot Platforms, and Coinbase Global.

Stanmore Resources Ltd (ASX: SMR) is an ASX coal share that has seen its share price rise to a much higher level than before Russia invaded Ukraine.

Other interesting data points

Looking at the wider millennial cohort, not just the rich ones, the largest number of trades involved ETFs. They were: the VAS ETF, Vanguard Diversified High Growth Index ETF (ASX: VDHG), Vanguard MSCI Index International Shares ETF (ASX: VGS), iShares S&P 500 ETF (ASX: IVV), and Betashares Nasdaq 100 ETF (ASX: NDQ).

Miners made up some of the most popular investments by the wider millennial cohort, including Fortescue Metals Group Ltd (ASX: FMG), Core Lithium Ltd (ASX: CXO), and Pilbara Minerals Ltd (ASX: PLS).

Non-millionaire baby boomers and Gen Xers liked trading in Core Lithium as well. It seems Gen X hasn't been doing much ETF trading. Millionaire baby boomers have, unsurprisingly, been trading a lot in ASX blue chips, and predominately selling the cash ETF Betashares Australian High Interest Cash ETF (ASX: AAA).

Meantime, millionaire Gen X investors have been interested in technology businesses like Advanced Micro Devices, Intel, and Quantumscape.

The post Top ASX shares wealthy young investors are buying right now appeared first on The Motley Fool Australia.

For readers that don't know much about ETFs, it's simply a way to buy a fund through a stock exchange like the ASX.

We can get instant diversification because we're buying a portfolio of businesses (or assets) in one go.

ETF structures can be very cheap for providers to operate, so people can get access to the share market for a lower price than what many active managers would charge.

This style of investing is attracting billions of dollars of investment every year.

Significant growth

According to BetaShares, so far this year the ETF industry has received $4.8 billion of net inflows, while Morningstar data suggests that unlisted funds have seen an estimated net outflow of $23.4 billion between January to May this year.

Fixed-income ETFs have received the most inflows this year, with $2.5 billion of net inflows. Meanwhile, Australian shares ETFs and cash ETFs have seen $1.6 billion and $688 million of net inflows this year respectively.

BetaShares also said that since the inception of the ETF industry in November 2001, the industry has seen a compound annual growth rate (CAGR) of 43% per annum.

Interestingly, BetaShares claimed to receive the most net inflows in the half-year to 30 June 2023, with around $1.8 billion. Vanguard received $1.5 billion of net inflows and iShares saw approximately $1.1 billion of net inflows.

Which were the most popular ASX ETFs?

When we look at which ETF has the most net assets, meaning which is the biggest, it's still the Vanguard Australian Shares Index ETF (ASX: VAS), with around $12.3 billion, according to Vanguard.

But, it wasn't even one of the ones that received the most inflows. With $506 million of net inflows, the Betashares Australian High Interest Cash ETF (ASX: AAA) was the leader of inflows.

Next, the iShares Core S&P/ASX 200 ETF (ASX: IOZ) was second for the half-year inflows with $448 million.

Finally, in third place for inflows over the half-year mark, was BetaShares Australia 200 ETF (ASX: A200) with $423 million of net inflows.

Why are ASX ETFs so popular?

Betashares CEO Alex Vynokur said more investors in Australia than ever before were adopting ETFs to improve diversification and reduce costs within their portfolios:

ETFs continue to cement their place in the portfolios of Australian investors, as they provide convenient and cost-effective exposure to a growing range of asset classes and investment strategies. This trend has pushed ETFs to $150 billion and is expected to facilitate continued growth for the industry for the foreseeable future.

Over the past 20 years, ETFs have allowed investors to improve outcomes right across their portfolio, whether it's shifting from higher cost unlisted funds, replacing underperforming active managers or improving diversification beyond the selection of single stocks.

The trend shows no sign of slowing as investors use ETFs to add exposure to high quality investment options across their portfolio.

The post Why ASX ETF investing has grown by 43% per year since 2001 and could reach $160 billion by Christmas appeared first on The Motley Fool Australia.

Over at exchange traded fund (ETF) provider Betashares, its chief economist, David Bassanese, believes there's a 50% chance that the global economy will fall into a recession. He commented:

Our most likely scenario is that the lagged impact of policy tightening over the past year, along with further modest tightening in the first half of 2023, soon leads to a notable slowing in global economic growth, such that the US in particular descends into outright recession,

In light of this, Bassanese has suggested that investors take a look at defensive options that could fare better in this environment. Here's what you need to know:

Global Healthcare ETF – Currency Hedged (ASX: DRUG)

The first ETF to look at is this global healthcare ETF. It provides investors with exposure to the largest global healthcare companies, hedged into Australian dollars. Bassanese notes that the largest global healthcare companies are predominantly pharmaceutical companies, which are often considered "defensive" by nature and can typically pass rising costs on to consumers.

Betashares Australian Quality ETF (ASX: AQLT)

Another option for investors to consider is the Betashares Australian Quality ETF. It aims to track an index that comprises 40 high-quality ASX shares. This includes companies such as CSL Limited (ASX: CSL) and Telstra Group Ltd (ASX: TLS).

Betashares Global Quality Leaders ETF (ASX: QLTY)

This is the international equivalent of the Betashares Australian Quality ETF. It gives investors exposure to a portfolio of approximately 150 global companies (excluding Australia). To be included in the ETF, a company needs to rank highly on four key metrics. These are return on equity, debt-to-capital, cash flow generation ability, and earnings stability. The ETF includes companies such as Alphabet, Microsoft, and Nvidia.

Bonds and cash

Three other ETFs that Bassanese is suggesting investors consider in the current environment have a focus on bonds and cash.

In respect to bonds, the chief economist notes that "market pricing suggests that rate cuts could be on the horizon. If markets are correct about this, and a US recession does occur, this could create favourable conditions for a rally in government bonds."

As a result, Bassanese has named U.S. Treasury Bond 20+ Year ETF – Currency Hedged (ASX: GGOV) and Australian Government Bond ETF (ASX: AGVT).

And if cash is more to your taste, then the Australian High Interest Cash ETF (ASX: AAA) could be worth considering.

Bassanese concludes:

This year has already presented many unexpected challenges for investors. Some, such as a potential US-led global recession, are already obvious and firmly in the sights of investors. Others – such as the recent spate of US bank failures – can catch investors off guard, remaining obscured until the very last moment. For investors who have positioned their portfolios appropriately, the impact might not be quite so severe.

The post Betashares names 6 'defensive' ASX ETFs to consider for a possible recession appeared first on The Motley Fool Australia.

But looking closer at the data, an interesting trend emerges. And it's one that is well worth a deeper dive.

So according to ETF provider BetaShares' Australian ETF Review for January 2022, the ETFs that received the most fund inflows over January were the ones we might expect. Namely index funds like the Vanguard Australian Shares Index ETF (ASX: VAS) and the Vanguard MSCI Index International Shares ETF (ASX: VGS). But it's the fourth and fifth ETFs in this list that represents an interesting trend.

Cash is king for ASX ETF investors

So below three index funds, the next ETFs receiving the most in fund inflows last month were the iShares Enhanced Cash ETF (ASX: ISEC) and the BetaShares Australian High Interest Cash ETF (ASX: AAA). These ETFs experienced approximately $107.5 million and $100.2 million in fund inflows over January respectively.

Now those ETFs, if you didn't notice, are both cash-based ETFs. A cash-based ETF has more in common with a bank account than an index fund like VAS. They don't hold any underlying shares at all. Instead, each unit represents a cash-based asset, which is not too much more than money in a bank account. For example, BetaShares tells us that its AAA ETF "aims to provide exposure to Australian cash deposits, with attractive monthly income distributions… Assets are invested in deposit accounts held with selected banks in Australia".

So it appears ASX investors are looking to increase their cash exposure via ETF products like AAA and ISEC. This is perhaps not such a surprise. After all, many investors like to move their capital to 'safe' assets like cash during periods of market volatility. An interesting insight into how some ASX investors are coping with the recent volatility. 

The post Why are ASX investors flocking to cash ETFs? appeared first on The Motley Fool Australia.