{"id":50855,"date":"2023-08-20T17:35:40","date_gmt":"2023-08-20T21:35:40","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/short-term-treasury-bills-are-the-sweet-spot-for-yield-hunters\/"},"modified":"2023-08-20T17:35:43","modified_gmt":"2023-08-20T21:35:43","slug":"short-term-treasury-bills-are-the-sweet-spot-for-yield-hunters","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=50855","title":{"rendered":"Short-Term Treasury Bills Are the Sweet Spot for Yield Hunters"},"content":{"rendered":"
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<\/div>\n<\/figure><\/div>\n

When looking for juicy yields, investors these days should stay short. <\/p>\n

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\u2014lose money. Short-term Treasury bills, which yield more than 5.4%, still look like an investor\u2019s better income bet.<\/p>\n

\n

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\u2019s massive bond selloff. It hasn\u2019t worked out well. Treasury yields have spiked as prices fell, and the
\n iShares 20+ Year Treasury Bond
\n 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 of declines. <\/p>\n

For investors seeking income, most bond funds have not fulfilled their promises. Treasury bills, though? They\u2019ve been fantastic, at least as fantastic as fixed income can be. The
\n iShares Short Treasury Bond
\n 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\u2014or until investors feel like they have a better read on what the Federal Reserve will do next\u2014Treasuries with short maturities are probably the best place to turn for income right now. <\/p>\n

They\u2019re also low-risk. Because bills return principal in a matter of months, not years, their prices are less sensitive to changes in interest rates than other Treasuries. That makes any short-term, low-risk fixed-income security, such as a three-month T-bill, immune to the kind of selloff long-term bonds have experienced recently. The biggest concern is that rates start to fall and investors will see juicy yields evaporate when they go to reinvest. Still, they can always move money from T-bills into other areas of the yield curve as things change. <\/p>\n

One low-cost way to buy bills, and other Treasuries, is to open a TreasuryDirect account, the only place to buy government securities directly from the Treasury Department. Still, operating an account can be a little clunky. Investors have to be traders too, rolling their short-term T-bills every few weeks. There are also purchase limits on TreasuryDirect, though not many individual investors will hit the $10 million per-bill-maturity limit.<\/p>\n

A simpler option is to buy an ETF that invests in nothing but ultra-short-term Treasuries, such
\n iShares 0-3 Month Treasury Bond
\n (SGOV), or
\n SPDR Bloomberg 1-3 Month T-Bill
\n (BIL), while those wanting to target a specific maturity, like the three-month bill, could buy the
\n US Treasury 3 Month Bill
\n ETF (TBIL) from F\/m Investments, which offers a series of funds that invest in specific Treasury maturities. <\/p>\n

Money-market accounts are another option for low-risk yield, but there is no guarantee of earning the current three-month T-bill rate, which works out to about 5.4% a year. Money-market funds, which can hold a mix of assets, currently range from about 4.2% to 5.2%. <\/p>\n

Whether through a money-market fund, a TreasuryDirect account, or a T-bill ETF, short-term still looks like the place to be\u2014at least until interest rates begin to normalize. <\/p>\n

Write to <\/strong>Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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\u2014lose money. Short-term Treasury bills, which yield more than 5.4%, still look like an investor\u2019s better income bet. Just […]<\/p>\n","protected":false},"author":1,"featured_media":50856,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-50855","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nShort-Term Treasury Bills Are the Sweet Spot for Yield Hunters | iFintechWorld<\/title>\n<meta name=\"description\" content=\"When looking for juicy yields, investors these days should stay short. 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