Launched on 03/07/2023, the US Treasury 6 Month Bill ETF (XBIL Quick QuoteXBIL - Free Report) is a smart beta exchange traded fund offering broad exposure to the Government Bond ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Us Benchmark Series. It has amassed assets over $528.89 million, making it one of the average sized ETFs in the Government Bond ETFs. Before fees and expenses, XBIL seeks to match the performance of the ICE BOFA US 6-MONTH TREASURY BILL INDEX .

The ICE BofA US 6-Month Treasury Bill Index comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding Treasury Bill that matures closest to, but not beyond, six months from the rebalancing date.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for XBIL are 0.15%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 4.30%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Its top 10 holdings account for approximately 100% of XBIL's total assets under management.

Performance and Risk

The ETF return is roughly 0.06% so far.

With about 2 holdings, it has more concentrated exposure than peers.

Alternatives

US Treasury 6 Month Bill ETF is a reasonable option for investors seeking to outperform the Government Bond ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

JPMorgan Ultra-Short Income ETF (JPST Quick QuoteJPST - Free Report) tracks N/A and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL Quick QuoteBIL - Free Report) tracks Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index. JPMorgan Ultra-Short Income ETF has $22.38 billion in assets, SPDR Bloomberg 1-3 Month T-Bill ETF has $33.38 billion. JPST has an expense ratio of 0.18% and BIL charges 0.14%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Government Bond ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.