SSGA builds out US Treasuries suite with 3-12 month T-Bill ETF

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

State Street Global Advisors has launched an ETF providing exposure to Treasury bills with remaining maturities between three and 12 months.

Noel Archard, global head of product for State Street ETFs.

Noel Archard, Global Head of SPDR Product for State Street Global Advisors.

The SPDR Bloomberg Barclays 3-12 Month T-Bill ETF (BILS US) has listed on NYSE Arca.

It comes with an expense ratio of 0.1357% and has been seeded with $10 million.

Treasury bills are debt obligations of the US government that are issued with no more than one year until expiry. They do not pay any coupons and are thus typically issued at a discount to their par value.

The ETF’s underlying index, the Bloomberg Barclays 3-12 Month US Treasury Bill Index, includes all publicly issued fixed-rate US Treasury bills in the required maturity range. The index is weighted by market capitalization and rebalanced monthly.

As of 31 August, there were 20 securities in the index which was yielding 0.11% with an effective duration of 0.43 years.

There are a number of reasons why the fund might be deployed within a portfolio. It could be used by investors to calibrate a portfolio’s overall credit or duration exposure or to help maintain a liquidity sleeve. It could also be utilized by low-risk investors who wish to eke out a little extra income and mitigate the effect of periods of negative yields at the very short end of the Treasury curve, as happened in March 2020.

SSGA now offers a complete line-up of US Treasury ETFs, each tracking a Bloomberg Barclays index, that collectively provides access to the full maturity spectrum of Treasury bills, notes, and bonds.

The $14.1bn SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL US) offers investors exposure to ultra-short-term Treasury bills with remaining maturities between one and three months. The fund’s expense ratio is 0.1359%.

The $3.1bn SPDR Portfolio Short Term Treasury ETF (SPTS US), the $2.5bn SPDR Portfolio Intermediate Term Treasury ETF (SPTI US), and the $2.6bn SPDR Portfolio Long Term Treasury ETF (SPTL US) provide exposure to Treasuries with remaining maturities in the 1-3 year, 3-10 year, and 10+ year ranges respectively. Each fund comes with an expense ratio of 0.06%.

Noel Archard, Global Head of SPDR Product at State Street Global Advisors, commented, “With clients concerned about negative rates on the shortest end of the curve, BILS provides an additional ultra-short-term Treasury option for fine-tuning fixed income portfolios to meet specific yield, duration, and risk parameters. The launch of BILS completes our SPDR ETF Treasury suite, which now provides clients with cost-effective access to the entire yield curve based on duration targets.”

Steve Berkley, CEO of Bloomberg Index Services, said, “At Bloomberg, we’re dedicated to providing index solutions that allow our clients to meet their evolving needs and address the changing global investment landscape. We are thrilled to work with State Street Global Advisors as they continue to build out their ETF suite, utilizing our indices as a strong foundation.”

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