WisdomTree has launched a floating rate US treasury bond exchange-traded fund (ETF) on the London Stock Exchange.
The Ucits-compliant fund aims, for the first time for European investors, to provide exposure to floating rate notes issued by the US treasury – which have been available in the US since they were launched in 2014.
US treasury floating rate notes make payments to bondholders each quarter with the coupon amount linked to movements in short-term interest rates.
As investors look for ways to reduce the overall interest rate risk exposure within their fixed income portfolios, the notes can help bridge a gap between short-maturity treasury bills that do not offer coupon payments and longer-maturity, fixed rate treasury bonds.
Christopher Gannatti, WisdomTree’s head of research, said: “For investors who are looking for another government bond instrument to replace some of the low yield exposures present in many developed market treasuries, US Treasury floating rate notes could provide a yield enhancement, especially given the flatness of the US yield curve.”
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