1nvest ICE US Treasury Short Bond Index Feeder ETF
1nvest recently launched the 1nvest ICE US Treasury Short Bond Index Feeder ETF, an ideal shortterm money market investment for investors with an investment horizon of within 12 months. The fund tracks the performance of the ICE US Treasury Short Bond Index, which measures the performance of US dollar denominated short-term government bonds issued by the US Treasury.
This means that South African investors can make rand investments in the 1nvest ICE US Treasury Short Bond Index Feeder ETF as an alternative to US dollar-denominated money market funds without affecting their exchange control limit, which restricts how much foreign cash SA investors can deploy each year. Furthermore, the index offers investors instruments matching the creditworthiness of the US government. While not totally risk-free, this solution is relatively safer than equity and medium-to long-term bond ETFs, especially in the currently volatile investment environment.
The 1nvest ICE US Treasury Short Bond Index Feeder ETF tracks the performance of the ICE US Treasury Short Bond Index. The index is market value weighted, and is designed to include US dollar denominated, fixed rate securities (Treasury Bills and Treasury Notes) with a minimum term to maturity greater than one month and less than or equal to one year. The aim of the ETF is to provide investment performance results linked to the performance of the index on a capital and income basis. It will distribute income quarterly.
Fund suitability
- This ETF is ideal for investors who have a slightly higher risk tolerance than highly conservative investors, making this a good alternative to investing in cash. It can be held as a standalone ETF for investors who may have liquidity requirements within a year but who would like to earn more interest than on traditional fixed deposits (in SA rands or US dollars).
Fees
- The fund has a total Investment cost of 0.26%.
Top Holdings
- Given the short-term nature of this investment, the ETF consists mainly of instruments that will mature within 12 months.
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Background: Exchange-traded funds (ETFs)
Exchange-traded funds (ETFs) are passively managed investment funds that track the performance of a basket of pre-determined assets. They are traded the same way as shares and the main difference is that whereas one share gives exposure to one company, an ETF gives exposure to numerous companies in a single transaction. ETFs can be traded through your broker in the same way as shares, say, on the EasyEquities platform. In addition, they qualify for the tax-free savings account, where both capital and income gains accumulate tax free.
Benefits of ETFs
- Gain instant exposure to various underlying shares or bonds in one transaction
- They diversify risk because a single ETF holds various shares
- They are cost-effective
- They are liquid – it is usually easy to find a buyer or seller and they trade just like shares
- High transparency through daily published index constituents
Disclaimer
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