U.S. Treasury bonds and related exchange traded funds have been an attractive option this year as safe-haven demand and relatively higher yields help attract investors.
Richard Clarida, global strategic advisor and managing director at PIMCO, argues that the global uncertainty has pushed more investors toward U.S. bonds, reports Kate Rooney for CNBC.
“As you have uncertainty about China and the oil market, and about global recovery, money flows into the U.S.,” Clarida told CNBC. “U.S. Treasurys are the place to be.”
Clarida, though, warned investors of shorter maturity debt. On the other hand, if the Federal Reserve leaves interest rates unchanged in its March meeting, Clarida suggested that investors should stick to the five- to seven-year point. [Investors Can’t Get Enough of Treasury Bonds, ETFs]
ETF investors can also focus more intermediate-term Treasuries through targeted Treasury bond-related funds, including the iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF), Schwab Intermediate-Term U.S. Treasury ETF (NYSEArca: SCHR), Vanguard Intermediate-Term Government Bond ETF (NYSEArca: VGIT) and SPDR Barclays Intermediate Term Treasury ETF (NYSEArca: ITE). Year-to-date, IETF was up 4.9%, SCHR was 3.1% higher, VGIT gained 3.0% and ITE rose 1.6%. [Bond ETFs to Weather a Political Storm]
IEF has a 7.00 year duration and a 1.54% 30-day SEC yield, SCHR has a 5.20 year duration and a 1.26% 30-day SEC yield, VGIT has a 5.20 year duration and a 1.25% 30-day SEC yield and ITE has a 3.88 year duration and a 1.01% 30-day SEC yield.
Yields on benchmark 10-year Treasury bonds ended at 1.70% Thursday.