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Is US Treasury 6 Month Bill ETF (XBIL) a Strong ETF Right Now?
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Designed to provide broad exposure to the Government Bond ETFs category of the market, the US Treasury 6 Month Bill ETF (XBIL - Free Report) is a smart beta exchange traded fund launched on 03/07/2023.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Us Benchmark Series. XBIL has been able to amass assets over $548.84 million, making it one of the average sized ETFs in the Government Bond ETFs. XBIL seeks to match the performance of the ICE BOFA US 6-MONTH TREASURY BILL INDEX before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.15% for XBIL, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 5.25%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, United States Treasury Bill 08/29/2024 (912797KD8) accounts for about 100.01% of the fund's total assets, followed by U.s. Bank Money Market Deposit Account 08/01/2031 (USBFS04) and Cash & Other (Cash&Other).
Its top 10 holdings account for approximately 100% of XBIL's total assets under management.
Performance and Risk
The ETF has added about 1.66% so far this year and was up about 5% in the last one year (as of 05/09/2024). In the past 52-week period, it has traded between $49.89 and $50.18.
XBIL has a beta of 0 and standard deviation of 0.40% for the trailing three-year period. With about 3 holdings, it has more concentrated exposure than peers.
Alternatives
US Treasury 6 Month Bill ETF is not a suitable option for investors seeking to outperform the Government Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
JPMorgan Ultra-Short Income ETF (JPST - Free Report) tracks N/A and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report) tracks Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index. JPMorgan Ultra-Short Income ETF has $23.08 billion in assets, SPDR Bloomberg 1-3 Month T-Bill ETF has $32.82 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.
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Is US Treasury 6 Month Bill ETF (XBIL) a Strong ETF Right Now?
Designed to provide broad exposure to the Government Bond ETFs category of the market, the US Treasury 6 Month Bill ETF (XBIL - Free Report) is a smart beta exchange traded fund launched on 03/07/2023.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Us Benchmark Series. XBIL has been able to amass assets over $548.84 million, making it one of the average sized ETFs in the Government Bond ETFs. XBIL seeks to match the performance of the ICE BOFA US 6-MONTH TREASURY BILL INDEX before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.15% for XBIL, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 5.25%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, United States Treasury Bill 08/29/2024 (912797KD8) accounts for about 100.01% of the fund's total assets, followed by U.s. Bank Money Market Deposit Account 08/01/2031 (USBFS04) and Cash & Other (Cash&Other).
Its top 10 holdings account for approximately 100% of XBIL's total assets under management.
Performance and Risk
The ETF has added about 1.66% so far this year and was up about 5% in the last one year (as of 05/09/2024). In the past 52-week period, it has traded between $49.89 and $50.18.
XBIL has a beta of 0 and standard deviation of 0.40% for the trailing three-year period. With about 3 holdings, it has more concentrated exposure than peers.
Alternatives
US Treasury 6 Month Bill ETF is not a suitable option for investors seeking to outperform the Government Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
JPMorgan Ultra-Short Income ETF (JPST - Free Report) tracks N/A and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report) tracks Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index. JPMorgan Ultra-Short Income ETF has $23.08 billion in assets, SPDR Bloomberg 1-3 Month T-Bill ETF has $32.82 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.