Invesco launches cheapest US Treasury bond ETFs in Europe

Jan 16th, 2019 | By | Category: Fixed Income

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Invesco has launched four US Treasury bond ETFs on London Stock Exchange (LSE) with total expense ratios (TERs) of just 0.06% – the lowest price tag among similar ETFs listed in Europe.

Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco

Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco.

The range includes three funds offering targeted exposure to different segments of the yield curve: 1-3 years, 3-7 years, or 7-10 years. The fourth fund provides broad exposure across the maturity spectrum from one to 30 years.

Each of the new ETFs invests directly in the constituents of the relevant Bloomberg Barclays US Treasury Index. These indices comprise USD-denominated, fixed-rate, nominal debt issued by the US Treasury.

US Treasuries currently offer some of the highest government bond yields available in the G7 group of developed economies. The yield on ten-year US Treasury bonds – currently 2.7%, as of 16 January 2019 – has more than doubled from the lows seen in mid-2016 as monetary policy has been tightened in the US.

Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco, said, “Whether an investor is cautious or has a more moderate risk appetite, US Treasury bonds are likely to play a significant role in their portfolio. These highly rated bonds are often valued for their ‘safe haven’ status and could be increasingly attractive for any investor who is concerned about recession or market volatility.”

The list of new Invesco US Treasury bond ETFs is as follows:

Invesco US Treasury Bond 1-3 Year UCITS ETF (TRE3 LN)
Invesco US Treasury Bond 3-7 Year UCITS ETF (TRE7 LN)
Invesco US Treasury Bond 7-10 Year UCITS ETF (TREX LN)
Invesco US Treasury Bond UCITS ETF (TRES LN)

The funds trade in US dollars and distribute income to investors on a quarterly schedule. They are also available on the LSE in pound sterling and on Borsa Italiana, where they trade in euros.

A GBP-hedged version of the Invesco US Treasury Bond 7-10 Year UCITS ETF has also been listed in London. It trades in pound sterling under the ticker TRXS LN and comes with a TER of 0.10%.

According to Invesco, the new funds highlight the firm’s intention to build out the fixed income segment of its ‘core ETF’ line-up – low-cost funds designed as primary building blocks for investors’ portfolios.

They follow launches in recent years of ETFs providing simple, low-cost exposure to USD corporate bonds and floating rate notes.

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