Invesco’s 7-10 year US Treasury bond ETF powers through $1bn milestone

Mar 28th, 2019 | By | Category: Fixed Income

Invesco has seen more than $1 billion flow into its newly launched Invesco US Treasury Bond 7-10 year UCITS ETF (TREX LN), making it one of the issuer’s fastest-growing ETFs ever and one of the most successful ETF debuts in Europe.

Invesco’s US Treasury Bond 7-10 year ETF swells to over $1bn AUM

Invesco believes its US Treasury bond suite will continue to see strong inflows as more institutional investors seek out the liquidity and cost benefits of ETFs.

The ETF was launched on 11 January as part of a suite of four US Treasury ETFs and now holds almost $1.1 billion in assets.

At launch, the funds were the lowest cost US Treasury ETFs in Europe with ongoing charges of just 0.06%, a title now held by the Amundi Prime US Treasury UCITS ETF (PRIT LN) at 0.05%.

The suite comprises four ETFs offering targeted exposure to different sections of the US government bond yield curve: 1-3 years, 3-7 years, 7-10 years, and 1-30 years.

The ETFs are physically backed and based on the Bloomberg Barclays US Treasury Index Series, a family of indices measuring the performance of USD-denominated, fixed-rate, nominal debt issued by the US Treasury.

Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco, commented, “We have seen plenty of client interest in our range of low-cost US Treasury ETFs, but with the strongest demand coming in the 7-10 year maturity segment. We think this is due to a more subdued outlook for US interest rates, with investors feeling arguably more confident with the higher yields available further out the maturity spectrum.”

According to Invesco, the ETF has garnered significant interest from institutional investors with the majority of the $1bn net inflows attributable to two transactions, each in excess of $300 million.

“Given that our 7-10 year US Treasuries ETF launched with just $5 million in seed capital, we think this showcases the profound liquidity of such vehicles and the simplified, highly efficient means they offer institutional clients to access fixed income exposure,” added Syms.

While surpassing $1bn in assets under management represents an impressive milestone for any fund or indeed suites of funds, Syms believes they have much further to go as an increasing number of institutional investors seek out the liquidity benefits of the ETF structure as well as the cost savings of such highly competitive products.

Syms notes, “We have seen a large, and growing, number of institutional investors better understanding how ETFs can be utilized in portfolios, in particular, that this liquidity means they should not be put off investing in smaller and/or newer funds. As such, we expect further flows from clients into our suite of very low-cost Treasury ETFs as the pool of investors grows.”

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