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Treasury ETFs Hit New Highs as Coronavirus Fears Spread
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The fixed income space has been enjoying huge rally lately on increased demand for safe havens. The rise in number of coronavirus cases worldwide has raised fears of pandemic that would derail the global economic growth (read: Global Bond ETFs in a Sweet Spot on Coronavirus Scare).
In particular, a growing number of companies have warned that the outbreak will prevent them from meeting sales or profit targets for the first three months of the year. Reduced demand for goods and services and factory closures in China are also expected to hurt global growth and weigh on trade at a time when Japan and Germany are already teetering on the brink of recession (read: Safe-Haven ETFs Rally as Coronavirus Cases Surge).
Per International Monetary Fund, the virus outbreak could reduce global economic growth by 0.1% this year. Goldman now expects the U.S. economy to grow just 1.2% in the first quarter, down from 2.1% in the fourth quarter and 2.3% in full-year 2019. The risk-off sentiments have reduced yields. Notably, the yields on the 10-year U.S. Treasury note fell to an all-time low of 1.31%.
The combination of factors, including moderating economic growth and weaker inflation expectations, has led to decline in rates.
As such, long-term Treasury bond ETFs have been hitting new all-time highs. The trend is likely to continue, at least for the near term, given the deepening virus-related worries. Below, we have profiled five ETFs that hit a 52-week high in the latest trading session. These funds have a Zacks ETF Rank #3 (Hold) (see: all Government Bond ETFs here).
PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ - Free Report) — New High: $157.80
This ETF follows the BofA Merrill Lynch Long Treasury Principal STRIPS Index and holds 21 securities in its basket. Both effective maturity and effective duration of the fund are 27.32 years. This fund has a decent level of $383.8 million in AUM and a light average daily volume of 44,000 shares. It charges 15 basis points (bps) in annual fees.
This fund provides exposure to the long-term Treasury STRIPS market by tracking the Bloomberg Barclays U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index. It holds 82 bonds with average maturity of 25.1 years and average duration of 24.2 years. Expense ratio comes in at 0.07%. The product has amassed $1.4 billion in its asset base and has a good volume of 180,000 shares per day on average.
iShares 20+ Year Treasury Bond ETF (TLT - Free Report) — New High: $151.76
This is the most popular and liquid ETF in the long-dated bond space with AUM of $20.8 billion and average daily volume of 10 million shares. It tracks the ICE U.S. Treasury 20+ Year Bond Index, holding 38 securities in its basket. The fund has average maturity of 25.31 years and effective duration of 18.33 years. It charges 15 bps in fees per year (read: ETFs to Invest in as Coronavirus Fears Accelerate).
Vanguard Long-Term Government Bond ETF (VGLT - Free Report) — New High: $92.87
With AUM of $1.9 billion, this fund follows the Bloomberg Barclays US Long Treasury Bond Index. It holds 52 bonds in its basket with average maturity of 25.3 years and average duration of 17.9 years. The ETF trades in a good volume of around 311,000 shares and has 0.05% expense ratio (read: Is it the Right Time to Buy Bond ETFs? Let's Explore).
This fund tracks the Bloomberg Barclays Long U.S. Treasury Index, charging investors 6 bps in annual fees. It holds 58 bonds in its basket with average maturity of 24.73 years and adjusted duration of 18.44 years. SPTL is one of the popular choices in the long-term Treasury space with AUM of $2.2 billion and average daily volume of 895,000 shares.
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Treasury ETFs Hit New Highs as Coronavirus Fears Spread
The fixed income space has been enjoying huge rally lately on increased demand for safe havens. The rise in number of coronavirus cases worldwide has raised fears of pandemic that would derail the global economic growth (read: Global Bond ETFs in a Sweet Spot on Coronavirus Scare).
In particular, a growing number of companies have warned that the outbreak will prevent them from meeting sales or profit targets for the first three months of the year. Reduced demand for goods and services and factory closures in China are also expected to hurt global growth and weigh on trade at a time when Japan and Germany are already teetering on the brink of recession (read: Safe-Haven ETFs Rally as Coronavirus Cases Surge).
Per International Monetary Fund, the virus outbreak could reduce global economic growth by 0.1% this year. Goldman now expects the U.S. economy to grow just 1.2% in the first quarter, down from 2.1% in the fourth quarter and 2.3% in full-year 2019. The risk-off sentiments have reduced yields. Notably, the yields on the 10-year U.S. Treasury note fell to an all-time low of 1.31%.
The combination of factors, including moderating economic growth and weaker inflation expectations, has led to decline in rates.
As such, long-term Treasury bond ETFs have been hitting new all-time highs. The trend is likely to continue, at least for the near term, given the deepening virus-related worries. Below, we have profiled five ETFs that hit a 52-week high in the latest trading session. These funds have a Zacks ETF Rank #3 (Hold) (see: all Government Bond ETFs here).
PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ - Free Report) — New High: $157.80
This ETF follows the BofA Merrill Lynch Long Treasury Principal STRIPS Index and holds 21 securities in its basket. Both effective maturity and effective duration of the fund are 27.32 years. This fund has a decent level of $383.8 million in AUM and a light average daily volume of 44,000 shares. It charges 15 basis points (bps) in annual fees.
Vanguard Extended Duration Treasury ETF (EDV - Free Report) — New High: $151.71
This fund provides exposure to the long-term Treasury STRIPS market by tracking the Bloomberg Barclays U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index. It holds 82 bonds with average maturity of 25.1 years and average duration of 24.2 years. Expense ratio comes in at 0.07%. The product has amassed $1.4 billion in its asset base and has a good volume of 180,000 shares per day on average.
iShares 20+ Year Treasury Bond ETF (TLT - Free Report) — New High: $151.76
This is the most popular and liquid ETF in the long-dated bond space with AUM of $20.8 billion and average daily volume of 10 million shares. It tracks the ICE U.S. Treasury 20+ Year Bond Index, holding 38 securities in its basket. The fund has average maturity of 25.31 years and effective duration of 18.33 years. It charges 15 bps in fees per year (read: ETFs to Invest in as Coronavirus Fears Accelerate).
Vanguard Long-Term Government Bond ETF (VGLT - Free Report) — New High: $92.87
With AUM of $1.9 billion, this fund follows the Bloomberg Barclays US Long Treasury Bond Index. It holds 52 bonds in its basket with average maturity of 25.3 years and average duration of 17.9 years. The ETF trades in a good volume of around 311,000 shares and has 0.05% expense ratio (read: Is it the Right Time to Buy Bond ETFs? Let's Explore).
SPDR Portfolio Long-Term Treasury ETF (SPTL - Free Report) — New High: $43.47
This fund tracks the Bloomberg Barclays Long U.S. Treasury Index, charging investors 6 bps in annual fees. It holds 58 bonds in its basket with average maturity of 24.73 years and adjusted duration of 18.44 years. SPTL is one of the popular choices in the long-term Treasury space with AUM of $2.2 billion and average daily volume of 895,000 shares.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>