6 ETFs To Gain From Money Market Mutual Fund Reform

September 16, 2016

  • SPDR Barclays 1-3 Month T-Bill ETF (BIL): An ultra-short term ETF that invests in Treasury bills with three months or less to maturity. The $1.6 billion fund costs only 0.14% in expense ratio, or $14 per $10,000 invested. Its 30-day yield is currently 0.13%.
  • iShares Short Treasury Bond ETF (SHV): Also an ultra-short-term Treasury ETF, but one that invests in debt with remaining maturity of up to 12 months—longer than BIL. The ETF offers a higher 30-day yield of about 0.31% thanks to that longer maturity. And SHV is also the largest of the three, with $3.4 billion in assets, and an expense ratio of 0.15%.
  • Goldman Sachs Treasury Access 0-1 Year ETF (GBIL): A new-to-market ultra-short-term ETF that invests in a basket of Treasury securities, including T-bills, T-notes, and floating rate notes with less than one year remaining in maturity. GBIL is unique in this segment, because it’s the first ETF of its kind to offer same-day creation/redemption by having two daily NAVs—one calculated at noon and one at 4 p.m. This feature gives authorized participants the ability to create/redeem same-day, whereas other ETFs have a creation/redemption settlement process that’s usually one to three days. That’s significant for a short-term cash product because many investors who own these types of instruments are looking for quick access to cash. The fund costs 0.14% in expense ratio and has $20 million in assets under management—GBIL is just one week old. 

There are also other ultra-short-term bond ETFs that are broader in exposure and built differently than BIL, SHV and GBIL, but that could also pick up some assets from money market funds. Among them, consider three actively managed, global-in-scope strategies:

 

 

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