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Treasuries are back in demand this year owing to market jitters. Investors have pumped about $100 billion in Treasury ETFs so far this year, nearly doubling the annual record of $51 billion set in 2018, according to the Wall Street Journal.
As such, iShares 20+ Year Treasury Bond ETF (TLT - Free Report) , which pulled in $11.8 billion in capital, is leading the space, followed by inflows of $11.6 billion for SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report) , $10.6 billion for iShares Short Treasury Bond ETF (SHV - Free Report) , $9.2 billion for iShares 1-3 Year Treasury Bond ETF (SHY - Free Report) and $9.1 billion for iShares U.S. Treasury Bond ETF (GOVT - Free Report) .
The Fed’s aggressive rate hikes, skyrocketing inflation and the prospect of the economy falling into recession have been weighing on investors’ sentiment, raising the appeal for Treasuries. Additionally, a shift from mutual funds into ETFs (known as "wrapper swapping") and attractive bond valuations have made the Treasury space compelling.
In fact, Treasury ETFs were the hottest instrument in September, pulling in about $22.1 billion. According to data from BlackRock. Government bonds, including Treasuries, accounted for 61% of all inflows, up from just 19.8% in August and the fourth-highest figure on record, BlackRock calculated. The strong inflows came even though the Bloomberg U.S. Aggregate bond index is on track for its worst year on record, declining 16%, according to FactSet.
Ultra-short Treasury bond ETFs also won investors’ love as these invest in securities with durations of less than one year, thus making them less vulnerable to rising rates. As the duration or interest rate sensitivity is lower, these act as a cushion against rising rates. Additionally, the time until maturity is short enough, so the odds of a substantial increase in rates during the bond's life are lower. As a result, an allocation to ultra-short duration ETFs could help protect the portfolio from rising rates (read: Ultra-Short Bond ETFs to Hedge Against Rising Rates).
iShares 20+ Year Treasury Bond ETF provides exposure to long-term Treasury bonds by tracking the ICE U.S. Treasury 20+ Year Bond Index. iShares 20+ Year Treasury Bond ETF holds 33 securities in its basket and charges 15 bps in annual fees. It has an average maturity of 25.66 years and an effective duration of 17.63 years.
TLT is one of the most popular and liquid ETFs in the bond space, with AUM of $23.9 billion and an average daily volume of 16.6 million shares. iShares 20+ Year Treasury Bond ETF has a Zacks ETF Rank #5 (Strong Sell) with a High-risk outlook (read: ETF Asset Report of Third-Quarter 2022).
SPDR Bloomberg 1-3 Month T-Bill ETF seeks to provide exposure to zero-coupon U.S. Treasury securities with a remaining maturity of 1-3 months. It follows the Bloomberg 1-3 Month U.S. Treasury Bill Index, holding 14 securities in its basket. Both average maturity and adjusted duration come in at 0.13 years each.
SPDR Bloomberg 1-3 Month T-Bill ETF has AUM of $25.2 billion and an average daily volume of 6 million shares. It charges 14 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium-risk outlook (read: 5 ETFs Hitting 52-Week High Amid Market Turmoil).
iShares Short Treasury Bond ETF provides exposure to U.S. Treasury bonds that mature in less than one year and follows the ICE Short U.S. Treasury Securities Index. iShares Short Treasury Bond ETF holds 47 securities in its basket, with both average maturity and an effective duration of 0.30 years.
iShares Short Treasury Bond ETF has amassed $23.5 billion in its asset base while trading in a solid volume of 3.8 million shares a day. It charges 15 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook
iShares 1-3 Year Treasury Bond ETF offers diversified exposure to the short-term U.S. Treasury bonds by tracking the ICE US Treasury 1-3 Year Index. Holding 76 securities in its basket, it charges 15 bps in annual fees and trades in an average daily volume of 5.7 million shares.
iShares 1-3 Year Treasury Bond ETF has AUM of $28.6 billion and a Zacks ETF Rank #3 with a Medium-risk outlook.
iShares U.S. Treasury Bond ETF offers exposure to the broad U.S. Treasury market with treasuries ranging from 1-30 year maturities by tracking the ICE US Treasury Core Bond Index. With AUM of $22.5 billion, iShares U.S. Treasury Bond ETF holds 130 bonds in its basket with a weighted maturity of 7.57 years and an effective duration of 6.02 years.
iShares U.S. Treasury Bond ETF charges investors 5 bps in fees per year and has a Zacks ETF Rank #4 (Sell) with a Medium-risk outlook.
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5 Treasury ETFs Gaining Investors' Love This Year
Treasuries are back in demand this year owing to market jitters. Investors have pumped about $100 billion in Treasury ETFs so far this year, nearly doubling the annual record of $51 billion set in 2018, according to the Wall Street Journal.
As such, iShares 20+ Year Treasury Bond ETF (TLT - Free Report) , which pulled in $11.8 billion in capital, is leading the space, followed by inflows of $11.6 billion for SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report) , $10.6 billion for iShares Short Treasury Bond ETF (SHV - Free Report) , $9.2 billion for iShares 1-3 Year Treasury Bond ETF (SHY - Free Report) and $9.1 billion for iShares U.S. Treasury Bond ETF (GOVT - Free Report) .
The Fed’s aggressive rate hikes, skyrocketing inflation and the prospect of the economy falling into recession have been weighing on investors’ sentiment, raising the appeal for Treasuries. Additionally, a shift from mutual funds into ETFs (known as "wrapper swapping") and attractive bond valuations have made the Treasury space compelling.
In fact, Treasury ETFs were the hottest instrument in September, pulling in about $22.1 billion. According to data from BlackRock. Government bonds, including Treasuries, accounted for 61% of all inflows, up from just 19.8% in August and the fourth-highest figure on record, BlackRock calculated. The strong inflows came even though the Bloomberg U.S. Aggregate bond index is on track for its worst year on record, declining 16%, according to FactSet.
Ultra-short Treasury bond ETFs also won investors’ love as these invest in securities with durations of less than one year, thus making them less vulnerable to rising rates. As the duration or interest rate sensitivity is lower, these act as a cushion against rising rates. Additionally, the time until maturity is short enough, so the odds of a substantial increase in rates during the bond's life are lower. As a result, an allocation to ultra-short duration ETFs could help protect the portfolio from rising rates (read: Ultra-Short Bond ETFs to Hedge Against Rising Rates).
Let’s delve deeper into the above-mentioned ETFs:
iShares 20+ Year Treasury Bond ETF (TLT - Free Report)
iShares 20+ Year Treasury Bond ETF provides exposure to long-term Treasury bonds by tracking the ICE U.S. Treasury 20+ Year Bond Index. iShares 20+ Year Treasury Bond ETF holds 33 securities in its basket and charges 15 bps in annual fees. It has an average maturity of 25.66 years and an effective duration of 17.63 years.
TLT is one of the most popular and liquid ETFs in the bond space, with AUM of $23.9 billion and an average daily volume of 16.6 million shares. iShares 20+ Year Treasury Bond ETF has a Zacks ETF Rank #5 (Strong Sell) with a High-risk outlook (read: ETF Asset Report of Third-Quarter 2022).
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report)
SPDR Bloomberg 1-3 Month T-Bill ETF seeks to provide exposure to zero-coupon U.S. Treasury securities with a remaining maturity of 1-3 months. It follows the Bloomberg 1-3 Month U.S. Treasury Bill Index, holding 14 securities in its basket. Both average maturity and adjusted duration come in at 0.13 years each.
SPDR Bloomberg 1-3 Month T-Bill ETF has AUM of $25.2 billion and an average daily volume of 6 million shares. It charges 14 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium-risk outlook (read: 5 ETFs Hitting 52-Week High Amid Market Turmoil).
iShares Short Treasury Bond ETF (SHV - Free Report)
iShares Short Treasury Bond ETF provides exposure to U.S. Treasury bonds that mature in less than one year and follows the ICE Short U.S. Treasury Securities Index. iShares Short Treasury Bond ETF holds 47 securities in its basket, with both average maturity and an effective duration of 0.30 years.
iShares Short Treasury Bond ETF has amassed $23.5 billion in its asset base while trading in a solid volume of 3.8 million shares a day. It charges 15 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook
iShares 1-3 Year Treasury Bond ETF (SHY - Free Report)
iShares 1-3 Year Treasury Bond ETF offers diversified exposure to the short-term U.S. Treasury bonds by tracking the ICE US Treasury 1-3 Year Index. Holding 76 securities in its basket, it charges 15 bps in annual fees and trades in an average daily volume of 5.7 million shares.
iShares 1-3 Year Treasury Bond ETF has AUM of $28.6 billion and a Zacks ETF Rank #3 with a Medium-risk outlook.
iShares U.S. Treasury Bond ETF (GOVT - Free Report)
iShares U.S. Treasury Bond ETF offers exposure to the broad U.S. Treasury market with treasuries ranging from 1-30 year maturities by tracking the ICE US Treasury Core Bond Index. With AUM of $22.5 billion, iShares U.S. Treasury Bond ETF holds 130 bonds in its basket with a weighted maturity of 7.57 years and an effective duration of 6.02 years.
iShares U.S. Treasury Bond ETF charges investors 5 bps in fees per year and has a Zacks ETF Rank #4 (Sell) with a Medium-risk outlook.