We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cash-Like ETFs Gaining Popularity Ahead of Rate Hikes
Read MoreHide Full Article
Wall Street has already seen wild swings this year, triggered by worries over higher interest rates and the resultant rising yields. This has raised the demand for cash-like ETFs, especially those that are relatively less vulnerable to interest-rate risk. These funds pulled in billions of dollars last week in the wake of Fed rate hikes.
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report) led the way, gathering $1.1 billion in capital followed by inflows of $893.6 million for PIMCO Enhanced Short Maturity Active ETF (MINT - Free Report) , $613 million for iShares Short Treasury Bond ETF (SHV - Free Report) , $176.4 million for JPMorgan Ultra-Short Income ETF (JPST - Free Report) and BlackRock Ultra Short-Term Bond ETF (ICSH - Free Report) , per etf.com.
These funds invest in short-term bonds and look like compelling picks. In fact, these will help investors in keeping aside money for a couple of weeks to a few months with almost no risk.
Rate Hike in the Cards
In the latest FOMC meeting, Fed Chair Jerome Powell, stated that "the economy no longer needs sustained high levels of monetary policy support," and that "it will soon be appropriate to raise rates for the first time in more than three years.”
Wall Street analysts are predicting as many as seven rate hikes this year. Goldman Sachs sees five rate hikes, versus four previously, with the first increase in March while Bank of America projects seven rate hikes this year. According to the CME FedWatch tool, the market is pricing in five interest rate hikes for 2022, with a sixth one starting to gain traction for later in the year (read: 3 Sector ETFs to Win Amid Rising Rates).
The yield on 10-year Treasury bonds is approaching 2% for the first time since August 2019.
Uncertain Market
The resurgence of the Omicron variant as well as skyrocketing inflation added to the chaos. Amid market uncertainty, investors prefer to hoard cash in order to mitigate the risk of a stock market decline in the weeks ahead.
SPDR Bloomberg 1-3 Month T-Bill ETF seeks to provide exposure to zero coupon U.S. Treasury securities that have a remaining maturity of 1-3 months. It follows the Bloomberg 1-3 Month U.S. Treasury Bill Index, holding 14 securities in its basket. Both average maturity and adjusted duration come in at 0.14 years.
SPDR Bloomberg 1-3 Month T-Bill ETF has AUM of $15.5 billion and an average daily volume of 2.2 million shares. It charges 14 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: ETF Strategies to Follow Amid Rising Yields).
PIMCO Enhanced Short Maturity Active ETF (MINT - Free Report)
PIMCO Enhanced Short Maturity Active ETF is actively managed that seeks greater income and total return potential than traditional cash investments in exchange for a modest increase in risk. It primarily invests in short duration investment grade debt securities. PIMCO Enhanced Short Maturity Active ETF holds 716 securities in its basket, with average maturity of 0.93 years and effective duration of 0.87 years.
PIMCO Enhanced Short Maturity Active ETF has accumulated $14 billion in its asset base while trades in a solid volume of around 1.3 million shares a day. It charges 35 bps in annual fees.
iShares Short Treasury Bond ETF provides exposure to U.S. Treasury bonds that mature in less than 1 year. It follows the ICE Short US Treasury Securities Index and holds 25 securities in its basket, with both average maturity of 0.39 years and effective duration of 0.38 years.
iShares Short Treasury Bond ETF has amassed $14.1 billion in its asset base while trading in solid volume of 1.3 million shares a day. It charges 15 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
JPMorgan Ultra-Short Income ETF invests mainly in investment-grade, U.S. dollar-denominated fixed, variable and floating-rate debt. It holds 679 bonds in its basket with average duration of 0.49 years (read: Guide to Interest Rates Hikes and ETFs: 5 Ways to Play).
JPMorgan Ultra-Short Income ETF has AUM of $18.3 billion in its asset base while trading in a good volume of around 3.4 million shares a day. It charges 18 bps in annual fees.
BlackRock Ultra Short-Term Bond ETF is actively managed and seeks to provide income by investing in a broad range of short-term U.S. dollar-denominated investment-grade fixed- and floating-rate debt securities and money market instruments. It holds 230 securities in its basket and charges 8 bps in annual fees. Average maturity and effective duration come at 0.72 years and 0.41 years, respectively.
BlackRock Ultra Short-Term Bond ETF has amassed $6.4 billion in its asset base while trading in volume of 1 million shares per day on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Cash-Like ETFs Gaining Popularity Ahead of Rate Hikes
Wall Street has already seen wild swings this year, triggered by worries over higher interest rates and the resultant rising yields. This has raised the demand for cash-like ETFs, especially those that are relatively less vulnerable to interest-rate risk. These funds pulled in billions of dollars last week in the wake of Fed rate hikes.
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report) led the way, gathering $1.1 billion in capital followed by inflows of $893.6 million for PIMCO Enhanced Short Maturity Active ETF (MINT - Free Report) , $613 million for iShares Short Treasury Bond ETF (SHV - Free Report) , $176.4 million for JPMorgan Ultra-Short Income ETF (JPST - Free Report) and BlackRock Ultra Short-Term Bond ETF (ICSH - Free Report) , per etf.com.
These funds invest in short-term bonds and look like compelling picks. In fact, these will help investors in keeping aside money for a couple of weeks to a few months with almost no risk.
Rate Hike in the Cards
In the latest FOMC meeting, Fed Chair Jerome Powell, stated that "the economy no longer needs sustained high levels of monetary policy support," and that "it will soon be appropriate to raise rates for the first time in more than three years.”
Wall Street analysts are predicting as many as seven rate hikes this year. Goldman Sachs sees five rate hikes, versus four previously, with the first increase in March while Bank of America projects seven rate hikes this year. According to the CME FedWatch tool, the market is pricing in five interest rate hikes for 2022, with a sixth one starting to gain traction for later in the year (read: 3 Sector ETFs to Win Amid Rising Rates).
The yield on 10-year Treasury bonds is approaching 2% for the first time since August 2019.
Uncertain Market
The resurgence of the Omicron variant as well as skyrocketing inflation added to the chaos. Amid market uncertainty, investors prefer to hoard cash in order to mitigate the risk of a stock market decline in the weeks ahead.
ETFs in Focus
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report)
SPDR Bloomberg 1-3 Month T-Bill ETF seeks to provide exposure to zero coupon U.S. Treasury securities that have a remaining maturity of 1-3 months. It follows the Bloomberg 1-3 Month U.S. Treasury Bill Index, holding 14 securities in its basket. Both average maturity and adjusted duration come in at 0.14 years.
SPDR Bloomberg 1-3 Month T-Bill ETF has AUM of $15.5 billion and an average daily volume of 2.2 million shares. It charges 14 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: ETF Strategies to Follow Amid Rising Yields).
PIMCO Enhanced Short Maturity Active ETF (MINT - Free Report)
PIMCO Enhanced Short Maturity Active ETF is actively managed that seeks greater income and total return potential than traditional cash investments in exchange for a modest increase in risk. It primarily invests in short duration investment grade debt securities. PIMCO Enhanced Short Maturity Active ETF holds 716 securities in its basket, with average maturity of 0.93 years and effective duration of 0.87 years.
PIMCO Enhanced Short Maturity Active ETF has accumulated $14 billion in its asset base while trades in a solid volume of around 1.3 million shares a day. It charges 35 bps in annual fees.
iShares Short Treasury Bond ETF (SHV - Free Report)
iShares Short Treasury Bond ETF provides exposure to U.S. Treasury bonds that mature in less than 1 year. It follows the ICE Short US Treasury Securities Index and holds 25 securities in its basket, with both average maturity of 0.39 years and effective duration of 0.38 years.
iShares Short Treasury Bond ETF has amassed $14.1 billion in its asset base while trading in solid volume of 1.3 million shares a day. It charges 15 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
JPMorgan Ultra-Short Income ETF (JPST - Free Report)
JPMorgan Ultra-Short Income ETF invests mainly in investment-grade, U.S. dollar-denominated fixed, variable and floating-rate debt. It holds 679 bonds in its basket with average duration of 0.49 years (read: Guide to Interest Rates Hikes and ETFs: 5 Ways to Play).
JPMorgan Ultra-Short Income ETF has AUM of $18.3 billion in its asset base while trading in a good volume of around 3.4 million shares a day. It charges 18 bps in annual fees.
BlackRock Ultra Short-Term Bond ETF (ICSH - Free Report)
BlackRock Ultra Short-Term Bond ETF is actively managed and seeks to provide income by investing in a broad range of short-term U.S. dollar-denominated investment-grade fixed- and floating-rate debt securities and money market instruments. It holds 230 securities in its basket and charges 8 bps in annual fees. Average maturity and effective duration come at 0.72 years and 0.41 years, respectively.
BlackRock Ultra Short-Term Bond ETF has amassed $6.4 billion in its asset base while trading in volume of 1 million shares per day on average.