GBIL Provides Short-Term Treasury Exposure in Uncertain Environment

With coronavirus cases spiking again, a degree of optimism may have left the markets as economies in various states were forced to shut down again shortly after re-opening. Even if confidence in the economy returns once cases dwindle, this type of volatility warrants some short-term exposure to safe haven Treasury bills via the Goldman Sachs Access Treasury 0-1 Year ETF (GBIL).

GBIL seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE US Treasury 0-1 Year Composite Select Index. The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index.

The index is designed to measure the performance of U.S. Treasury Securities with a maximum remaining maturity of 12 months. The investment adviser uses a representative sampling strategy to manage the fund.

As market confidence returns, Treasury yields are moving slightly higher, thereby causing prices of the safe haven government debt to fall. However, if the forecast proves to be incorrect, another short-term fall in yields could bring prices back up.

“The market is trading on the expectation that the economy is not going to shut down for a second time. It is looking past the short term,” said Andrew Richman, managing director of fixed income at Truist/SunTrust Advisory Services via a Reuters report.

As such, limiting duration can be achieved via the GBIL ETF as most of its exposure to Treasury notes doesn’t exceed one year. As of July 9, the majority of notes fall within the 0- to 3-month maturity range and the 3- to 6-month maturity range.

GBIL gives investors:

  • Treasury exposure: GBIL seeks to track the FTSE US Treasury 0-1 Year Composite Select Index (Total Return, Unhedged, USD) (the “Index”), which is designed to measure the performance of U.S. Treasury Obligations with a maximum remaining maturity of one year, through an easy access vehicle.
  • Dynamic trading capabilities via an ETF: In addition to the typical intraday trading ease of ETFs, GBIL offers two daily Net Asset Values, allowing Authorized Participants to create or redeem twice a day. We believe this feature enhances the liquidity and versatility of the fund, offering a wider range of potential applications.
  • Backed by Goldman Sachs’ market experience: GSAM Fixed Income and Liquidity Solutions has over 35 years of experience in Treasury security selection, trade negotiation, and execution. The team employs a rigorous risk management process and volume trading in the Treasury market, resulting in economies of scale.

For more fund information, click here.

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