What does MM think of AAA & DRO?
Good morning Team, Please advise 1)how to calculate the annual return of AAA. Is there a better alternative to parking spare cash in AAA? 2) The potential of DRO as an investment? Thanks & regards, Sidney
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Answer
Hi Sidney,
The AAA invests in cash accounts and passes through the income that is generated to holders of the ETF. The current rate is 4.17% based on the interest earnt. It will rise as cash rates rise and vice versa. The reason to hold AAA is two fold. 1. Some broking platforms pay less on cash accounts (and they pocket the difference) so buying AAA with spare funds can be beneficial & 2. Ease of diversifying across multiple banks in one transaction. Better rates will be achieved on TDs however the rate on AAA is high for essentially an at call account.
Regarding Drone Shield (DRO) – we covered last week (here).
