Short-Term Treasury ETFs No Longer Make Investment Sense

Summary

  • After a strong run over the last 12 months, these short-term Treasury ETFs are now yielding very close to zero.
  • There’s little upside potential and little yield benefit over Treasury money market funds, which lock in your share price at $1.
  • Are these ETFs a risky investment? No, they are fine. But the reward-versus-risk equation doesn’t look appealing.

Over the last year, as short-term interest rates dropped dramatically, a lot of investors poured money into short-term Treasury ETFs as a way to capture a yield advantage over a money market account, while retaining safety.

Unfortunately, those days are over.

Read my full analysis on SeekingAlpha.com

About Tipswatch

Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
This entry was posted in Investing in TIPS. Bookmark the permalink.

2 Responses to Short-Term Treasury ETFs No Longer Make Investment Sense

  1. Erwin says:

    All investment grade bonds are yielding less than inflation. So what do you do with the money that you do not want to risk in the stock market?

    • Tipswatch says:

      You can use I Bonds to at least match official U.S. inflation. Otherwise, the choice comes down to 1) accept more risk, or 2) accept a slightly lower standard of living in the future.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s