Barron's on Treasury Bills, ETFs
Barron's writes that, "Treasury Bills are the Sweet Spot for Yield." It tells us, "When looking for juicy yields, investors these days should stay short. Buying long-dated Treasury bonds seemed like a great opportunity earlier this year, but now they look set to do what bonds have done all too often—lose money. Short-term Treasury bills, which yield more than 5.4%, still look like an investor’s better income bet. Just a few months ago, the 10-year Treasury yield was sitting near 3.3%, and all the talk was about taking advantage following 2022’s massive bond selloff. It hasn’t worked out well. Treasury yields have spiked as prices fell, and the iShares 20+ Year Treasury Bond exchange-traded fund (ticker: TLT), which tracks returns on long-dated U.S. government bonds, has suffered losses of 2.7% during the past three months and is down 8% in 2023, on pace for its third consecutive year o"f declines." Barron's says, "For investors seeking income, most bond funds have not fulfilled their promises. Treasury bills, though? They’ve been fantastic, at least as fantastic as fixed income can be. The iShares Short Treasury Bond ETF (SHV), which owns bills and notes maturing in 12 months or less, has returned 2.9% so far this year, already surpassing its best return since its inception in 2008. And as long as yields keep rising -- or until investors feel like they have a better read on what the Federal Reserve will do next -- Treasuries with short maturities are probably the best place to turn for income right now." They add, "A simpler option is to buy an ETF that invests in nothing but ultra-short-term Treasuries, such iShares 0-3 Month Treasury Bond (SGOV), or SPDR Bloomberg 1-3 Month T-Bill (BIL), while those wanting to target a specific maturity, like the three-month bill, could buy the US Treasury 3 Month Bill ETF (TBIL) from F/m Investments, which offers a series of funds that invest in specific Treasury maturities. Money-market accounts are another option for low-risk yield."
