Invesco has launched an exchange-traded fund (ETF) focused on securities at the shortest end of the US treasury bond market. It is the lowest cost vehicle of its kind in Europe, the fund manager has claimed.
Longer-dated bonds are less attractive than a year ago due to the flattening of the US yield curve, according to the firm. For this reason, Invesco believes there may be a demand for investors considering bonds nearer to maturity.
Paul Syms, the firm’s head of regional ETF fixed income product management, said: “The Federal Reserve said in its final policy meeting of 2019 that US interest rates were likely to stay on hold for a time, but markets seem to be discounting some future easing.”
“The resultant flattening of the US yield curve means the additional interest-rate risk that comes with investing in longer-dated bonds looks less attractive than it did a year ago.”
The Invesco US Treasury Bond 0-1 Year Ucits ETF aims to deliver the performance of the Bloomberg Barclays US Treasury Coupons Index, and comes with an ongoing charge of 0.06% per year.
The index comprises US dollar-denominated fixed rate nominal debt issued by the US treasury with maturities of at least one month and no more than 12 months.
The index rebalances monthly and excludes Treasury bills, inflation-linked bonds, floating-rate bonds and strip bonds where the principal and regular coupon payments have been removed and are sold separately to investors as new securities.
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