This article was originally published on ETFTrends.com.
With interest rates rising, some fixed income investors are seeking refuge with ultra-short term Treasury exchange traded funds. Popular destinations on that front include the SPDR Barclays 1-3 Month T-Bill (BIL) and the Goldman Sachs Treasury Access 0-1 Year ETF (NYSEArca: GBIL) .
GBIL, which is two years old, looks to reflect the performance of the Citi US Treasury 0-1 Year Composite Select Index, which is comprised of U.S. Treasury Obligations with a maximum remaining maturity of 12 months. U.S. Treasury obligations refer to securities issued by the U.S. Treasury where payment of principal and interest is backed by the U.S. government.
“With markets hitting all-time highs, investors are increasingly dumping cash into the Goldman Sachs Access Treasury 0-1 Year ETF, or GBIL, and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF, or BIL, both of which track short-term U.S. government debt,” reports Bloomberg.
Big Moves in Treasury Yields
Data confirm that amid rising Treasury yields, BIL and GBIL are seeing increasing interest from investors.
“GBIL’s assets have soared past $2 billion for the first time as a record $220 million flowed into the fund on Tuesday, following $145 million on Monday. And both ETFs have seen their average daily volumes spike this week,” according to Bloomberg.
The ability to generate returns in short-dated fixed income ETFs has increased. As a result, money has been flowing into short term treasuries and cash type products to gain interest from investors who are hedging against market risk.
BIL seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index.
“Both GBIL and BIL are purely cash-parking plays given their ultra-short term maturities, Bajaj said. The two strategies hold U.S. Treasury bonds with maturities of a year or less, with those in BIL maturing from one to three months,” according to Bloomberg.
For more information on the fixed-income markets, visit our bond ETFs category.
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