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Bear Market Thoughts: A Look At The 'Cash-Alternative' ETFs

May 04, 2020 7:43 AM ETJPST, MINT, NEAR32 Comments


  • There are three cash-alternatives that we are going to take a look at today; MINT, JPST and NEAR.
  • These ETFs appear like they had some significant losses, but relatively speaking they were quite shallow.
  • The "mirage" is that they have had quite flat share prices for years so dips look "massive."
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Get started today »

Written by Nick Ackerman, co-produced by Stanford Chemist

We have discussed many times in the past looking for places to park cash. Some of the funds we highlighted were; PIMCO Enhanced Short Maturity Active ETF (MINT), JPMorgan Ultra-Short Income ETF (JPST) and iShares Short Maturity Bond ETF (NEAR). We have seen what looks to be "massive" drops in their share price through this latest COVID-19 induced crisis. Though, I would argue that they still performed rather well and as expected. They dropped but still provided a significant buffer to what an investor's drawdown could have been. This then provided an investor that was brave enough to jump into closed-end funds at some significant discounts.

I want to be clear though, even as the Fed is providing unprecedented support - it doesn't mean we are completely out of the woods yet. I'm not sure if the lows are in or not, but I do know that we have finally seen the pullback in valuations that we have wanted to see for a while. If you are still leery of the market, having some funds in these "cash-alternatives" could be warranted. I just wouldn't hold too high of an allocation - especially those with a longer-term investment horizon. It isn't important that you pick up shares of funds at an absolute bottom to still put up respectable returns over time. I highlighted my thoughts on long-term investing previously.


These funds have been steady for years, before "massive" drop. To put this massive drop into perspective though, I wanted to put the performance into perspective. It isn't nearly as bad as one would imagine. Although, if an investor was looking at these as a "cash-alternative," this might be a bit more volatile than they would like. I would argue, however, that we can still utilize these positions for a safe place. That's because these still held

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This article was written by

Nick Ackerman profile picture

Nick Ackerman is a former financial advisor using his experience to provide coverage on closed-end funds and exchange-traded funds. Nick has previously held Series 7 and Series 66 licenses and has been investing personally for over 14 years.

He contributes to the investing group Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article was originally published on April 12th, 2020 to members of the CEF/ETF Income Laboratory.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (32)

Thanks for this article. But if you want an ETF that's as close a possible to cash, you need something even more conservative like BIL (SPDR Bloomberg Barclays 1-3 Month T-Bill ETF -- a mouthful, I know). If you compare BIL to any of the options you mentioned, the chart for BIL looks like the electrocardiogram of someone who died. It's almost perfectly flat. The others look wildly volatile by comparison. BIL had no steep drop (or any meaningful drop) in late March like the others experienced. The tradeoff is that its yield is now < 0.2%. But if you're looking for the ETF equivalent of money in a mattress, BIL would be my pick.
Nick Ackerman profile picture
Thank you for taking the time to share your thoughts!

Then why not just hold cash....???????????
@jackmaster20 Because BIL still pays a higher yield than the 0.01% currently paid by the cash options in my brokerage accounts. And since I can trade with zero fees there's no cost to moving money in and out of BIL.
NV_GARY profile picture
I'll take MGF - nearly all Gov't issue/backing & a managed 7.25%. NAV stable/rising, div increasing. Roc not used last mo, but was this month, again rising NAV so n problem for now.
You have to be careful with funds from MFS because several of them return capital and thus have declining NAVs over time (this is the only way you can have a 7%+ distribution from a government bond fund that doesn't use leverage). If you check the 10 year NAV chart for MGF you can see the steady decline. MIN is another popular bond fund from MFS that has the same issue.
I used MINT for a while but switched to BSV, price holds up better and currently yielding 2.23%
Nick Ackerman profile picture
Glad that is working out for you!
SHV, SHY, and IGSB are other options to be considered, but none of these offer much in yield.
Nick Ackerman profile picture
Thank you for the additional options!
Stanford Chemist profile picture
Thanks for covering this piece for our Income Lab members @Nick Ackerman !
How about SPSB ?
Been rock steady for months and months
but took the big dip for the same reason 
you mention for your three amigos.
By the way, thanks for mentioning the “raise cash in a crash”
as that makes sense for SPSB price action.
However, SPSB (quick) recovery looks way better than your three musketeers.
Nick Ackerman profile picture
Yes, that certainly looks like another one that would fit this group. Thank you for pointing it out!
I can keep cash under my bed. An ETF, not so much.
Nick Ackerman profile picture
Thank you, @me_too ! Certainly, I hope you keep it in some sort of interest-bearing account and not literally under your bed. Although the rates have been coming down since the Fed cut (and probably will continue to drift lower,) you can still find savings paying 1%+.
Rowbearto profile picture
@Nick Ackerman Looking into the dividends these funds are paying, I noticed that the latest div. from JPST dropped substantially from $.091 to .075. ~18% haircut ( TDAmeritrade shows latest div. @ $.06 ) MINT and NEAR dropped as well but not quite the same %. You did point out that yields will "continue a downward trend from here" but it seems like that was a very notable drop for JPST. That could very well produce downward pressure on it's share price.
Nick Ackerman profile picture
That is quite a drastic cut and more substantial than I would have initially imagined. However, since it is an ETF, the structure will keep the fund trading near its NAV. That is regardless of the selling pressure since they don't typically show discounts and premiums for extended periods of time.
I park my cash in cash. For me, not worth tying up money in ETFs with relatively low yields and might actually lose value, or ultra safe stuff like short term Treasuries or CDs for less than .5%. Plus cash gives you the most flexibility in this very volatile market.
Nick Ackerman profile picture
That's understandable! Thank you, @fujilomi !
I parked my cash in SHV and it seems to be increasing in value. Although this may technically be a bond fund

i have a little in SHY as well which is short term bonds
Nick Ackerman profile picture
Thank you for sharing, @m63333 !
JES profile picture
You advertise these as “a place to park cash” or an
“ alternative to cash” and then you compare them to the SPY and say they did quite well,
You should only compare them to cash. No so good. If I kept cash I also have funds to
mickelsson profile picture
Cash is currently losing 1.5% per year in inflation. It lost 2.3% in 2019.
Nick Ackerman profile picture
@JES needed a barometer of "being invested," thank you for your suggestion though!
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