Single-bond ETFs gain traction

Aug 2nd, 2023 | By | Category: Fixed Income

F/m Investments has announced that the US Benchmark Series, its suite of fixed income ETFs comprising just a single underlying US Treasury bond, has reached $2 billion in assets under management.

Alexander Morris, President and CIO of F/m Investments

Alexander Morris, President and CIO of F/m Investments.

The milestone was reached in just less than one year after the initial launch of the US Benchmark Series in August 2022.

Alex Morris, President and CIO of F/m Investments, commented: “The rapid growth of the US Benchmark Series over the course of the first 11 months since launch proves how necessary this product line is for investors.

“We are pleased to have created the US Benchmark Series in time to both meet investors’ needs for precise Treasury solutions with ETF ease and capture material yields across the curve.”

The US Benchmark Series consists of ten Nasdaq-listed ETFs which hold the most current (on-the-run) issue for the three-month, six-month, one-year, two-year, three-year, five-year, seven-year, ten-year, 20-year, and 30-year tenors of the Treasury yield curve.

Each of the ten ETFs always holds its respective tenor’s latest issue, trading out of the previous issue as soon as a new on-the-run issue is released.

Reflecting investors’ ongoing concerns over rising interest rates, the majority of the suite’s AUM is currently located within the shortest-duration ETFs with more than $1.5bn invested in the products providing exposure to three-month and six-month tenors.

The full suite of ETFs, along with their AUM, is listed below:

The US Treasury 3 Month Bill ETF (TBIL US); $1.3bn
The US Treasury 6 Month Bill ETF (XBIL US)
; $230 million
The US Treasury 12 Month Bill ETF (OBIL US)
; $110m
The US Treasury 2 Year Note ETF (UTWO US)
; $320m
The US Treasury 3 Year Note ETF (UTRE US)
; $2m
The US Treasury 5 Year Note ETF (UFIV US)
; $3m
The US Treasury 7 Year Note ETF (USVN US)
; $1m
The US Treasury 10 Year Note ETF (UTEN US)
; $40m
The US Treasury 20 Year Bond ETF (UTWY US)
; $2m
The US Treasury 30 Year Bond ETF (UTHY US)
; $3m

According to F/m Investments, the growing popularity of its single-bond ETFs reflects the products’ unique benefits which include allowing institutional investors to avoid custody issues related to holding actual US Treasuries. For retail investors, meanwhile, the ETFs for the first time open up access to single-bond trading, a useful tool for precise duration management.

Each ETF distributes dividends monthly, providing a more frequent and regular interest payment than holding actual US Treasuries, while investors also benefit from the liquidity, convenience, and potential tax benefits inherent in the ETF structure.

Each fund comes with an expense ratio of 0.15%.

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