In the investment world, fixed income assets have been considered a haven for investors seeking stability and somewhat consistent returns. Among the fixed income assets, Treasury ETFs have gained significant popularity.
Despite challenges faced this year, investors have shown a continued interest in this asset class, with six of the top 13 fixed income ETFs by YTD flow offering targeted exposure to Treasury securities. This could be due to their inherent reliability and potential for long-term growth. Drawing on data from LOGICLY, this article will dive into the Treasury ETFs that boast the highest YTD inflows, shedding light on some of their standout features and key characteristics.
iShares Treasury Bond ETFs
The iShares 20+ Year Treasury Bond ETF (TLT) has experienced a YTD return of 3.14%, attracting an impressive $10.4 billion in inflows YTD, more than any other bond ETF. TLT has an expense ratio of 0.15% and an AUM of $39.16 billion, making it the fifth-largest fixed income ETF. It has emerged as one of the most popular options for investors seeking exposure to long-dated Treasuries. Since the fund’s inception on July 22, 2002, TLT has grown to become a key portfolio tool for many investors, including institutional investors.
With the same inception date as TLT, the iShares 7-10 Year Treasury Bond ETF (IEF) is another large and widely held fixed income ETF. It offers exposure to moderate levels of interest risk while providing the possibility for higher income than short-term ETFs. That said the fund has underperformed many other funds in the category this year and has a YTD return of 1.03%. Despite its underperformance, IEF has attracted $5.7 billion in flows YTD, with a total AUM of $29 billion. It also has an expense ratio of 0.15%. IEF continues to appeal to investors seeking a more balanced approach to fixed income investing.
Short-Term Treasury ETFs
For investors looking for shorter maturities and lower levels of risk, the Schwab Short-Term U.S. Treasury ETF (SCHO) has become an attractive option. Launched on August 5, 2010, SCHO focuses on securities with one to three years of maturity, resulting in a lower interest rate risk. Its low expense ratio of 0.03% has also proven to be attractive to investors. With YTD flows of $4.0 billion and an AUM of $14.3 billion, SCHO has solidified its position as a common choice for investors seeking a position in the short-term Treasury bond market.
Similar to SCHO, the Vanguard Short-Term Treasury ETF (VGSH) focuses on Treasury bonds with maturities between one and three years. VGSH offers investors a low expense ratio of 0.04%, also making it an attractive choice for cost-conscious investors. It has YTD flows of $3.7 billion and an AUM of $22.2 billion. VGSH has successfully gained the interest of investors seeking an opportunity to invest in short-term treasury ETFs.
Other Treasury ETFs
While the previous ETFs focused on fixed-rate Treasury bonds, the WisdomTree Floating Rate Treasury Fund (USFR) takes a different approach. USFR focuses on treasury bonds with floating interest rates, providing investors with the potential for higher returns. It has an expense ratio of 0.15% and an inception date of February 4, 2014. USFR has achieved a remarkable 1-year return among this group of funds of 4.10%. The fund currently has $17 billion in assets and has witnessed YTD flows of $3.5 billion. This has made it a compelling option for investors who seek exposure to treasury bonds with floating interest rates.
Lastly, the Vanguard Long-Term Treasury ETF (VGLT) offers investors exposure to long-term government bonds. Specifically, bonds that focus on treasuries with maturities of ten years or more. The fund has an affordable expense ratio of 0.04%. VGLT’s inception date is November 19, 2009, showing that it has been around the block for quite some time. The fund also has also returned 2.87% YTD outperforming this category’s average. It has a YTD inflow of $2.1 billion and an AUM of $6.2 billion.
By analyzing the YTD flows of Treasury ETFs, it becomes evident that investors are continuing to show immense interest in this asset class. Regardless of the investment goals and risk appetite, there are Treasury ETFs and other fixed income ETFs that can meet the needs of various types of investors. With the help of LOGICLY’s data, investors can make informed decisions and capitalize on the significant flows within this asset class.
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