Investors looking for less volatility in their portfolio may find value in augmenting their portfolios with one of Invesco’s most stable fixed income offerings.
The funds that have the lowest 50-day volatility as of September 12 are the Invesco Treasury Collateral ETF (CLTL), the Invesco Ultra Short Duration ETF (GSY), and the Invesco VRDO Tax-Free ETF (PVI), according to VettaFi.
CLTL tracks an index of U.S. Treasurys with a maximum remaining maturity of 12 months. The fund combines the safety of debt backed by the full faith and credit of the U.S. government with an ultra-short-term portfolio that guards against interest rate increases.
Bond prices typically fall when rates rise because rising rates erode the purchasing power of a bond’s coupon payment. Long-term debt normally takes a larger hit than short-term debt, according to VettaFi. This ETF could be a good fit for investors and advisors looking for a short-term place to stash cash and manage liquidity. CLTL’s expense ratio is eight basis points.
GSY is actively managed, charging just 22 basis points, and looks to achieve maximum current income while preserving capital and maintaining daily liquidity. As a result, the fund should be considered an ultra-safe place to park assets in times of great turmoil. Just don’t expect the fund to pay out a very high yield as the product only seeks to beat the 1-3 month Treasury Bill Index and maintains securities that have a duration of less than one year, according to VettaFi.
The fund invests in U.S. treasuries, corporate debt, and even up to ten percent in high yield bonds. This added bond holding could help the fund boost yield, and since it is such a short term, the product could see very little in terms of defaults.
PVI offers exposure to the ultrashort end of the maturity curve, focusing on tax-exempt Variable Rate Demand Obligations or VRDOs. These issues are issued by municipalities and reset on a weekly basis, meaning it has virtually no interest rate risk. PVI can be a great safe haven to park assets in volatile markets but won’t deliver much in the way of current yield, according to VettaFi.
The fund charges a 25 basis point expense ratio.
For more news, information, and strategy, visit the Innovative ETFs Channel.