VanEck to launch 33rd ETF: Short-term US Treasury Bonds (ASX: TBIL)
Sydney, 15 May 2023 – VanEck’s 1-3 month US Treasury Bond ETF (ASX code: TBIL) will list on the ASX on Thursday morning. TBIL will consist of short-term US treasury bills that are high-quality AAA-rated securities.
Arian Neiron CEO and Managing Director VanEck, Asia Pacific said, “TBIL will be the first short-term US Treasury bond ETF of its kind listed on the ASX. The fund is launching at an opportune moment for investors as over the past 12 months short-term treasury bond yields have jumped following a series of interest rate hikes from the Federal Reserve. Short-term treasury bond yields should continue to rise while inflation persists."
“As TBIL comes to market short-term US treasury yields have surged to highs not seen for over a decade as the Fed has continued its unrelenting fight against inflation. That presents an attractive opportunity for Australian investors to target the high yields of short dated US treasury securities given the RBA cash rate is lower.”
TBIL is VanEck’s 33rd ETF listed on the ASX and has been designed with Australian investors in mind.
“Currently, short-term treasury bond yields are higher than longer-term yields as an inverted yield curve. The index that TBIL tracks is the Bloomberg U.S. Treasury Bills: 1-3 Months Unhedged AUD."
“Investors are increasingly looking for portfolio defence as inflation remains high and markets are volatile. Improving the credit quality of investors’ fixed income sleeve can help build portfolio defence given US Treasury Securities are the ‘go-to’ asset for risk management,” said Neiron.
“For Australian investors, exposure to liquid US Treasury Securities offers investors a potential hedge against systemic or market episodes. With TBIL being Australian dollar unhedged and the Australian dollar considered as a 'risk on' currency, in times of uncertainty the Australian dollar has historically lost value relative to the US dollar. The US dollar exposure may provide capital appreciation during periods of economic weakness."
“TBIL’s launch is timely given the financial and political uncertainty the world faces. History has shown when confidence erodes, or when volatility spikes in financial markets, investors gravitate towards short-term US treasury bonds as a safe haven because they are considered a ‘risk-free’ asset as their payments are backed by the full support and credit of the US. US government bonds are highly rated by Fitch, S&P and Moody’s."
“TBIL gives investors access to short-term US treasury bonds via the efficiency of an ETF. The VanEck 1-3 Month US Treasury Bond ETF offers exposure to short-term US treasury bonds that mature within the next three months allowing investors to target the short-end of the yield curve," said Neiron.
Fund: VanEck 1-3 Month US Treasury Bond ETF
ASX code: TBIL
Features
- Attractive yield relative to Australian short-term equivalents - Short-term US treasury bonds offer close to the federal funds rate and serve as a proxy for risk-free interest rates.
- Potential protection against rising rates - concerns about rising rates have prompted many investors to consider moving out of longer-duration bonds. Short-term US treasury bonds move with short-term interest rates, which helps investors keep up when short term rates rise.
- Risk management - in times of market stress, investors gravitate towards short-term US treasury bonds as a safe haven as they are extremely liquid. The US Government is highly rated by Fitch, S&P and Moody’s.
- US dollar exposure – the AUD is considered a “risk on” currency so in times of uncertainty it has historically depreciated relative to the US dollar. US dollar exposure could provide capital appreciation during periods of economic weakness.