ETF Spotlight on the WisdomTree Bloomberg Floating Rate Treasury Fund (NYSEArca: USFR), part of an ongoing series.
Assets: $2.5 million
Objective: The WisdomTree Bloomberg Floating Rate Treasury Fund tries to reflect the performance of the Bloomberg U.S. Treasury Floating Rate Bond Index, which is comprised of floating rate public obligations of the U.S. Treasury.
Holdings: U.S. Treasury FRN 0.095% 2/31/2016
What You Should Know:
- WisdomTree is the sponsor of the fund.
- USFR has a 0.15% expense ratio.
- The ETF currently tracks one U.S. Treasury floating rate note.
- The fund was launched February 4, 2014.
- USFR is down 0.3% since its inception.
- The ETF has a -0.03% 30-day SEC yield.
- Funds can run a negative yield over the short term, which suggests investors are willing to pay a premium for protection against a potential spike in interest rates.
- The notes’ have a so-called reset period with interest rates tied to a benchmark, such as the Fed funds, LIBOR, prime rate or U.S. Treasury bill rate.
- The fund has an effective duration of 0.02 years, so a 1% rising interest rates would translate to about a 0.02% dip in the ETF’s value.
- “We believe that floating rate Treasury securities represent an effective way for investors to help reduce their exposure to rising interest rates while generating income payments that are backed by the full faith and credit of the U.S. government,” according to WisdomTree.
- Investors should consider using limit orders to better control trades in USFR.
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