Ahead of 2024, many investors are likely revisiting their portfolios. A new year presents an obvious opportunity to take stock of an investor’s priorities, or perhaps build a strong foundation. Adding income could appeal to investors and advisors with all kinds goals, from those feeling optimistic to those feeling a bit more defensive. Either way, the WisdomTree Floating Rate Treasury Fund (USFR) and its Treasury ETF approach, could be one to watch.
Why look to Treasuries in the first place? Treasuries offer a very safe option for yield, and with investors still looking for fixed income, they have a role to play. Especially entering a new year, it may make sense to start from a stable position.
The Right Treasury ETF Can Make a Play
Of course, investors often use options with Treasuries, which “do” come with volatility. Indeed, the ICE BofA MOVE Index measures the “implied” volatility of Treasury options across two-, five-, 10-, and 30-year maturities. While volatility has risen, of course, the yield curve remains inverted, and the right Treasury ETF can make a play. Through its use of floating rate notes (FRNs), USFR can stake its claim.
See more: Rate Hikes Over? Perhaps Not: Eye USFR
USFR tracks the Bloomberg U.S. Treasury Floating Rate Bond index as part of its approach. The ETF launched just as FRNs hit the market, with FRNs themselves resetting their coupon rate weekly based on the most recent 90-day Treasury bill auction.
As such, they offer a low-risk place to invest. While they would take a hit if rates fall, that remains some way away. Rate cuts may not even hit before 2025, and as such, USFR remains a solid treasury ETF to consider entering a new year.
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