DWS launches ultra-short US Treasuries ETF

Sep 17th, 2020 | By | Category: Fixed Income

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DWS has launched a new fixed income ETF in Europe providing exposure to ultra-short duration US Treasuries.

Olivier Souliac, DWS’s Head of Passive Index Strategy & Analytics

Olivier Souliac, DWS’s Head of Passive Index Strategy & Analytics.

The Xtrackers US Treasuries Ultrashort Bond UCITS ETF has listed on the London Stock Exchange in US dollars (XT0D LN) and pound sterling (XT01 LN) and on Xetra in euros (XT01 GY).

The fund tracks the FTSE US Treasury Short Duration Index which consists of fixed- and floating-rate Treasuries with remaining maturities under one year and three years, respectively.

TIPS, Strips, callable Treasuries, and bonds with original maturities greater than ten years are not eligible for inclusion.

The index, which is weighted by market capitalization and rebalanced monthly, currently contains 69 constituents and has a yield of 0.16% and an effective duration of 0.40 years.

Olivier Souliac, DWS’s Head of Passive Index Strategy & Analytics, commented, “We aim to offer our clients a full range of fixed income exposures to meet all their asset allocation needs. This new ETF, which provides long US Treasury bond exposure but with ultrashort duration risk, provides investors with a low interest rate risk but improved yield alternative to cash.”

The ETF comes with an expense ratio of 0.07% which matches the fee on the recently unveiled Vanguard US Treasury 0-1 Year Bond UCITS ETF (VDST LN). Other low-cost products in the segment include the Invesco US Treasury Bond 0-1 Year UCITS ETF (TREI LN) at 0.06% and the Amundi Prime US Treasury Bond 0-1Y UCITS ETF (PR1T GY), the cheapest in the field, as measured by TER, at 0.05%.

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