Invesco has broadened its USD2.3 billion range of US Treasury Bond ETFs with the launch of a fund focused on securities at the shortest end of the maturity curve. The Invesco US Treasury Bond 0-1 Year UCITS ETF aims to deliver the performance of the Bloomberg Barclays US Treasury Coupons Index and, with an ongoing charge of 0.06 per cent per annum, is the lowest-cost ETF in Europe for exposure to that index.
Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco, says: “The Federal Reserve said in its final policy meeting of 2019 that US interest rates were likely to stay on hold for a time, but markets seem to be discounting some future easing. The resultant flattening of the US yield curve means the additional interest-rate risk that comes with investing in longer-dated bonds looks less attractive than it did a year ago. As a result, we believe investors may wish to consider bonds nearer to maturity.”
The index comprises US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury with maturities of at least one month and no more than 12 months. The index rebalances monthly and excludes Treasury bills, inflation-linked bonds, floating-rate bonds and STRIP bonds (where the principal and regular coupon payments have been removed and are sold separately to investors as new securities).
Invesco launched the first of its range of US Treasury Bond ETFs in January 2019. The fund focussing on the 7-10 year segment attracted net new assets of more than USD2 billion by the end of the year, making it the firm’s most successful ETF launch in Europe.