Invesco launches Europe’s cheapest ultra-short US Treasury ETF

Jan 28th, 2020 | By | Category: Fixed Income

Invesco has broadened its range of US Treasury bond ETFs with the launch of the Invesco US Treasury Bond 0-1 Year UCITS ETF on the London Stock Exchange.

Invesco launches Europe’s cheapest ultra-short US Treasury ETF

Invesco offers the cheapest range of US Treasury bond ETFs in Europe with each fund coming with an expense ratio of just 0.06%.

The fund comes with an expense ratio of just 0.06%, becoming Europe’s cheapest ETF to focus on Treasury securities at the shortest end of the maturity curve.

It is linked to the Bloomberg Barclays US Treasury Coupons Index which consists of US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury with maturities between one and 12 months.

Treasury bills, inflation-linked bonds, floating-rate bonds, and STRIPs are not eligible for inclusion.

Constituents are weighted by market value, and the index is reconstituted and rebalanced on a monthly basis.

The index currently offers a yield to maturity of 1.62% and has an effective duration of 0.52 years.

Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco, commented, “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 fund, which has been seeded with $5 million, is available to trade in US dollars (Dist – TREI LN; Acc – TRIA LN) and pound sterling (Dist – TRIS LN; Acc – T1AP LN). Invesco has also launched a sterling-hedged version of the ETF (Dist – TIGB LN) which costs 0.10%.

The fund complements Invesco’s existing line-up of four low-cost Treasury bond ETFs which were rolled out in January 2019 and have since collectively gathered $2.3bn in assets under management.

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, as well as a fourth ETF which provides broad exposure across the maturity spectrum from one to 30 years. These ETFs also come with expense ratios of 0.06%.

Tags: , , , , , , , ,

Leave a Comment