Investing in the AAT770 Daily High Interest Savings Account Fund, HISA, for BMO InvestorLine RRSP, TFSA and Other Accounts

Sometimes you have cash sitting around in your investment account. You may be waiting for a market pullback. You may be waiting for fixed income rates to improve before locking in for a longer term. You may need to make a withdrawal from your RRIF or your TFSA soon and need to keep the money handy in cash. Till recently, that meant getting no interest at BMO InvestorLine, or getting a very low interest rate if you could risk locking the money in for 30 days in a cashable GIC with a minimum $10,000 investment. Or, if you had $25,000 or more, you could have purchased units of a high interest savings account fund such as ATL5000. Now, in April 2013, BMO InvestorLine is offering a new choice in daily high interest savings accounts with a somewhat better minimum.

A Vote of Thanks to a Reader for Highlighting this New Option

I’d just like to publicly thank John who pointed out this new option is available. It is much appreciated both by me and I’m sure by other readers!

Investing in BMO AAT High Interest Savings Account Funds

The new offering is two funds:

  • AAT770 the BMO AAT CAD High Interest Savings Account
  • AAT780 the BMO AAT USD High Interest Savings Account

Each fund has a value of 1.00 dollars per unit. AAT770 is Canadian dollars. AAT780 is US dollars.

What is the “High” Interest Offered on These Funds?

“High” in these days of record low interest rates is a bit of a stretch.

UPDATE: On October 3, 2017, AAT770 is paying 0.95% and AAT780 is paying 0.5%.
UPDATE: On March 18, 2017 AAT770 is paying 0.75% and AAT780 is paying 0.5%.
UPDATE: On January 29, 2014 AAT770 is paying 1.25% and AAT780 is paying 0.25%.
UPDATE: On November 2013, AAT770 is paying 1.25% and AAT780 is paying 0.20%.

The rates offered as of April 11, 2013 are: AAT770, 1.27% on Canadian dollar investments;AAT780, 0.25% on US dollar investments.

What is the Minimum Investment Required to Buy Units in AAT770 or AAT780?

For both funds, the minimum initial purchase is $5,000. Subsequent purchases can be $500 or more. UPDATE: 2017 10 03, minimum purchase is $1 000 and subsequent purchases can be $50 or more.

While I haven’t tested it yet, I expect to find that you must keep a minimum balance of $5,000 (UPDATE now $1000) per fund. With the old $25,000 minimum funds like ATL5000, if you tried to sell a few units and drop below a holding of $25,000 it would refuse the transaction, telling you to either sell all or none.

I will test this minimum in the future, but first I have to buy some!
[UPDATE: As of April 2013 when I tried a partial sell that would take my balance below $5000 the system would not let me enter the order. It said I had to keep a balance of $5000 or sell all.]

I have tested whether the system will let you purchase less than $5000. It won’t.

NOTE: Although a $5,000 minimum is much better than the previous $25,000 minimum required by InvestorLine, it’s still quite high. You can invest in ATL5000 with a $1000 minimum at CIBC. UPDATE: As of 2017 10 03 you can also invest in AAT770 with a minimum of $1 000.

Is There an Early Redemption Fee for AAT770 or AAT780?

As with ATL5000 there should not be an early redemption fee. I will also be testing this in future.
[Update: As of April, 2013 I redeemed all units in my RRSP account. There was no fee deducted from my account either for the buy or the sell. I redeemed fewer than 7 days after purchasing.]

However, with any daily interest product the interest is calculated daily but paid monthly. So if you redeem all of your units before the interest is paid for that month, you will forfeit that interest. This is similar to withdrawing all of your money and closing a daily interest bank account. (I hope to test the options Cash and Reinvest, however. Perhaps you can still get your interest paid out to your cash account even if you sell all of your units before month end. I will report on that if and when I get a test done.)

[Update: To my amazement, when I did a test redemption in April 2013, they actually paid out the interest accrued during the very short time (less than 1 month) that the money was invested. Apparently I’ve been wrong about this and I apologize to BMO InvestorLine for my misguided thinking.]

Is There a Commission or Fee to Buy AAT770 or AAT780?

There does not appear to be any fee or commission to purchase these units. The fund is described as “No Load” on the purchase order screen. I will be testing this, too.
[Update: I did a purchase and sale within a few days of each other and was not charged any fees in April 2013.]

What Next?
I’m off to test the product with a buy and, after it settles, a sell. I also want to make a buy and hold it to see how the interest gets paid.

Related Reading

Join In
PLEASE share your experiences with high interest savings accounts at InvestorLine or other online brokerages. One reader already brought this new option to light through a comment. Your thoughts may be equally useful to other investors.

9 thoughts on “Investing in the AAT770 Daily High Interest Savings Account Fund, HISA, for BMO InvestorLine RRSP, TFSA and Other Accounts

  1. Unless you were allowed to journal between these two funds to avoid foreign exchange fees, and unless you face exceptional costs for transferring money between your brokerage and a HISA, there’s little reason to stick with this fund over a HISA account at, say, CDF or People’s Trust.

    • The biggest reason to invest in the HISA within the InvestorLine (or Investor’s Edge) account is to retain quick access to your money. You can see a stock opportunity and buy immediately. Then you can place the sell for all or part of your HISA fund. The HISA cash will appear in your account at the start of the second full business day after you make the sale. The stock purchase will come out of your account at the start of the third full business day after the buy.

      If you transfer to a higher-interest-paying account at another financial institution you have to add about 5 days (or more) for the “hold” placed both when you send it out and when you bring it back. In fact it can often be significantly more than 5 days.

      In the “good old days” brokerages like InvestorLine and Investor’s Edge paid interest on your cash balances. Perhaps when interest rates rise again, they will start paying again.

      • Unfortunately the safe ways to invest don’t make much money: high interest savings accounts and guaranteed investment certificates pay only about 1-4% a year. Bonds may pay a bit more but right now it’s very important to research a bond carefully before buying it. The stock markets in Canada and the USA are also trading at near record high levels which means they could drop back down again at any time. Please be very cautious with any investments you choose. Take the time to learn all the details before you agree to buy anything. In particular, be sure to get any costs and hidden fees explained before proceeding.

  2. Hi! Can I use this account for monthly withdrawals from my RIF and/or LIF .I would be depositing money from my retirement RIF/LIF approx. twice a year to fund my income, keeping,at least, the min. amt. in the acct..

    • Unfortunately AAT770 isn’t a separate account. It’s just a mutual fund that behaves like a savings account. The mutual fund is purchased and sold as an investment within your BMO InvestorLine RIF trading account.

      So while you could certainly withdraw from AAT770 monthly, it only lets the money get as far out as your regular BMO InvestorLine RIF account. Then you’d still need to withdraw it from that into either your BMO bank account or your BMO InvestorLine unregistered trading account. And I’m not completely sure but I think InvestorLine charges you if you make more than 2 withdrawals per year from your InvestorLine RIF account.

      So I don’t think this is the option you are looking for, unfortunately.

Leave a Reply

Your email address will not be published. Required fields are marked *