The Rise of Single Bond ETFs: A New Frontier in Investing

The Exchange-Traded Fund (ETF) landscape has seen significant innovation over the years, with fund issuers continually developing new products to meet the evolving needs of investors. One of the latest trends in this space is the emergence of single bond ETFs, which, as the name suggests, invest in a single bond or Treasury bill. These ETFs offer a unique investment proposition that is attracting a growing number of investors.

Take, for example, the U.S. Treasury 3 Month Bill ETF (TBIL), which crossed $1 billion in assets under management less than 10 months after launching. Unlike most other Treasury ETFs, which hold a basket of different Treasury securities with varying maturities, TBIL solely invests in the most recently auctioned three-month T-bill, also known as the “on the run” three-month T-bill.

This fine-tuned exposure might not offer any additional benefits for the average investor compared to other bond ETFs. However, for investors with sophisticated strategies, the more precise exposure provided by single-bond ETFs like TBIL can be quite useful.

F/m Investments, the issuer of TBIL, offers single-bond ETFs tied to Treasuries of other maturities as well, such as the two-year note, the five-year note, the 10-year note, and the 30-year bond. Some of these, like the U.S. Treasury 2 Year Note ETF (UTWO) and the U.S. Treasury 6 Month Bill ETF (XBIL), have gathered hundreds of millions of dollars in assets and are on their way to potentially becoming the next billion-dollar single-bond ETFs.

It’s worth noting that these single-bond ETFs aren’t necessarily only for those with sophisticated investment strategies. As a simple buy-and-hold investment, a fund like TBIL stacks up well against a competitor like the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL). Their expense ratios are similar, they both pay out dividends monthly, and they have both returned approximately 4% since last August.

Similarly, the U.S. Treasury 10 Year Note ETF (UTEN) matches up well with the iShares 7-10 Year Treasury Bond ETF (IEF). Both have expense ratios of 0.15% and distribute income monthly. UTEN is down more since its inception last August, but that’s simply because an ETF that holds a single 10-year bond is more interest rate sensitive than one that holds bonds of various maturities between seven and 10 years.

The U.S. Treasury 3 Month Bill ETF (TBIL) is currently priced at $50.04. Here are some key statistics:

  • The ETF has seen a 0.16% price change over the last 10 days, a 0.59% change over the last 30 days, and a 3.21% change over the last 6 months.
  • The ETF has reached a new 52-week high today, with no change from this high.
  • The average trading volume over the last 6 months is 409,824.6 shares, and today’s volume is 450,055 shares.
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