Many fixed income investors have started venturing out along the yield with Treasuries as yields continue to rise. But with yields on long-term U.S. Treasury bonds at their highest level since October 2007, it may not be a bad idea to move past intermediate-duration funds.
The U.S. Treasury 10-year note reached 4.49% on Thursday. As Morningstar noted, that’s up from nearly 4.1% at the end of August and nearly 3.8% at the beginning of the year.
So, for investors ready to enjoy the yields that 10-year Treasuries provide, there’s the BondBloxx Bloomberg Ten Year Target Duration US Treasury ETF (XTEN). The fund targets U.S. Treasury securities with an average duration of roughly 10 years. It carries an expense ratio of 0.08%.
See more: “Treasury Yields: A Long-Term Perspective”
XTEN is one of eight duration-specific U.S. Treasury ETFs that BondBloxx offers. They track a series of indexes that include duration-constrained subsets of U.S. Treasuries with more than $300 billion outstanding. They’re designed to track indexes that achieve target durations using U.S. Treasury securities instead of specific maturities or maturity ranges.
The ETFs range in duration from six months to 20 years.
Targeting Duration With Risk-Off Government Bonds
BondBloxx was launched in October 2021 to develop precision fixed income ETFs. Now, the issuer offers 20 funds that span U.S. Treasuries, industry- and credit-rating-specific high yield bonds, and emerging markets bonds.
“BondBloxx is one of the more innovative providers of fixed income ETFs,” said VettaFi’s head of research Todd Rosenbluth. “They offer advisors and investors the opportunity to target duration with risk-off government bonds.”
The issuer recently crossed the $2 billion asset mark, largely due to demand for its Treasury bond ETFs. At a panel on VettaFi’s Fixed Income Symposium, BondBloxx co-founder Joanna Gallegos said that U.S. Treasuries have been a great alternative to cash. They’re also a great way to capture as much yield as possible.
“It’s hard to walk away from a 5% risk-free yield,” she said.
For more news, information, and analysis, visit the US Treasuries & TIPS Fixed Income Channel.