Another option is the Pimco Enhanced Short Maturity Strategy Fund (NYSEArca: MINT). For investors disillusioned with Treasurys and looking for alternative ultra-short-term investment, MINT may well serve a purpose. Here at IndexUniverse, MINT has its supporters and detractors, but it should at least be considered in this conversation.
MINT comes with its own issues that must be considered. The fund is actively managed to outperform money market funds. The fund managers select investment-grade securities, both domestic and foreign, of varying maturities. The fund, however, maintains a low duration, keeping its interest rate risk low. It charges a higher expense ratio than BIL or SHV, at 35 basis points.
Nevertheless, it remains the only other investment-grade option within all ETFs with low duration. Considering the similar durations of SHV and MINT, MINT’s yield is substantially higher. Furthermore, since its inception, MINT has dramatically outperformed SHV, while remaining uncorrelated with other major asset classes.
|Ticker||Fund Name||AUM($, MM)||30 Day SEC Yield||Duration||Expense Ratio|
|BIL||SPDRS Barclays Capital 1-3 Month T-Bill ETF||2,026.6||0.08%||0.12||0.13%|
|SHV||iShares Barclays Short Treasury Bond Fund||4,310.6||0.00%||0.40||0.15%|
|SHY||iShares Barclays Short 1-3 Year Treasury Bond Fund||9,009.0||0.16%||1.80||0.15%|
|STIP||iShares Barclays Short 0-5 Year TIPS Bond Fund||193.2||1.39%||1.30||0.20%|
|STPZ||PIMCO 1-5 Year U.S. TIPS Index Fund||1,217.6||1.53%||2.50||0.20%|
|MINT||PIMCO Enhanced Short Maturity Strategy Fund||1,350.8||0.81%||0.63||0.35%|
|PIMCO Enhanced Short Maturity Strategy (MINT)||1||0.091|
|iShares Barclays Short Treasury Bond (SHV)||0.091||1|
|iShares Barclays Aggregate Bond (AGG)||0.526||0.2|
|SPDR S&P 500 (SPY)||-0.15||0.026|
|iShares MSCI ACWI (ACWI)||-0.091||0.029|
|SPDR Barclays Capital International Treasury Bond (BWX)||0.101||0.038|
|(Daily Correlation: 11/19/2009 to 8/18/2011)|
Given the current interest rate and market environment, investors must consider all their options for safe-keeping their money. BIL and SHV may be the safest of the safe, but there are interesting options just a smidge further out the curve.