ETF Trends publisher Tom Lydon discussed the iShares Short Treasury Bond ETF (SHV) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
With duration risk in a rising rate environment, bond investors traditionally shift down the yield curve into short-term debt to diminish rate risk.
With the advent of bond ETFs, many have turned to short-term duration bonds, like SHV. Bond funds may buy and sell a number of debt securities to achieve their target short-, intermediate- or long-term goals.
Consequently, the portfolio of debt holdings will have an average effective duration for investors to gauge interest rate risk.
Related: ETF Trends Fixed Income Channel
SHV is among a group of popular bond ETF plays this year as the Fed eyes rate hikes.
To hedge rate risk, ETF investors have funneled close to $6 billion into SHV so far this year; Investors put $2.5 billion into SHV in April alone.
SHV tracks the ICE U.S. Treasury Short Bond Index, which is comprised of U.S. Treasury obligations with a maximum remaining term to maturity of 12 months.
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