Latest news with #SchwabShort-TermUSTreasuryETF
Yahoo
28-02-2025
- Business
- Yahoo
US Fixed-Income, International Funds Surge as Market Falters
U.S. equity funds took it on the chin Thursday as investors poured cash into U.S. fixed-income and international equity ETFs amid growing tariff and inflation fears, and a so-so showing by U.S. chipmaker Nvidia Corp. Fixed-income funds saw net inflows of $2.28 billion and international ETFs had a healthy influx of $1.48 billion. Meanwhile, U.S. equity issues booked a mere $593.8 million on the day. Overall, assets under management rose 0.03% to $10.8 trillion from the previous day. Leading the ETF exodus was the tech-heavy Invesco QQQ Trust (QQQ), which relinquished $1.8 billion, followed closely by $1.33 billion that fled the iShares Russell 2000 ETF (IWM), which tracks U.S. small-cap stocks. The iShares Core S&P 500 ETF (IVV) led gainers with $836 million worth of flows, and right behind it was the Schwab Short-Term US Treasury ETF (SCHO) with $609.2 million. Ticker Name Net Flows ($, mm) AUM ($, mm) AUM % Change IVV iShares Core S&P 500 ETF 835.96 595,559.23 0.14% SCHO Schwab Short-Term US Treasury ETF 609.18 12,217.52 4.99% VOO Vanguard S&P 500 ETF 543.39 619,881.78 0.09% IWF iShares Russell 1000 Growth ETF 457.89 103,900.30 0.44% IQLT iShares MSCI Intl Quality Factor ETF 322.06 8,897.02 3.62% VCIT Vanguard Intermediate-Term Corporate Bond ETF 319.45 49,685.20 0.64% VXUS Vanguard Total International Stock ETF 307.13 81,868.44 0.38% VWO Vanguard FTSE Emerging Markets ETF 294.14 83,024.77 0.35% VGT Vanguard Information Technology ETF 292.85 85,127.49 0.34% IEMG iShares Core MSCI Emerging Markets ETF 264.50 83,415.38 0.32% Ticker Name Net Flows ($, mm) AUM ($, mm) AUM % Change QQQ Invesco QQQ Trust Series I -1,800.35 327,613.08 -0.55% IWM iShares Russell 2000 ETF -1,326.37 67,774.35 -1.96% QLD ProShares Ultra QQQ -702.48 6,824.89 -10.29% IBIT iShares Bitcoin Trust ETF -418.06 48,327.34 -0.87% SPY SPDR S&P 500 ETF Trust -326.83 629,558.79 -0.05% VNQ Vanguard Real Estate ETF -277.21 35,612.44 -0.78% LQD iShares iBoxx $ Investment Grade Corporate Bond ETF -241.01 30,279.32 -0.80% TLT iShares 20+ Year Treasury Bond ETF -238.92 54,768.10 -0.44% SMH VanEck Semiconductor ETF -231.55 22,519.60 -1.03% FDN First Trust Dow Jones Internet Index Fund -186.10 6,947.72 -2.68% Net Flows ($, mm) AUM ($, mm) % of AUM Alternatives 14.02 9,956.86 0.14% Asset Allocation -75.05 23,231.43 -0.32% Commodities ETFs -44.51 180,513.56 -0.02% Currency -838.01 108,494.54 -0.77% International Equity 1,478.79 1,647,866.22 0.09% International Fixed Income 346.83 277,957.38 0.12% Inverse -12.09 12,890.05 -0.09% Leveraged -261.15 117,365.32 -0.22% US Equity 593.79 6,773,616.68 0.01% US Fixed Income 2,284.00 1,620,704.58 0.14% Total: 3,486.62 10,772,596.61 0.03%Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the | © Copyright 2025 All rights reserved
The National
08-02-2025
- Business
- The National
Why short-term bonds are a compelling investment option
A bond is a fixed-income instrument where a person lends money to a government or a company at a particular interest rate for a fixed time. The entity repays individuals with interest in addition to the original face value of the bond. Bond yields are inversely related to bond prices, meaning if yields are up, the value of the bond declines and vice versa. This relationship between yield and prices can be further explained by duration. Duration describes how much a bond's price will rise or fall with a change in interest rates. Bonds are usually used as diversifiers in a portfolio as they help reduce risk during market downturns. Bonds can have varying maturity, ranging from a few months to years. Here, we will look into short-term government bonds (one to three years) and long-term US government bonds (10 to 30 years). Interest rate sensitivity: Short-term bonds are less affected by interest rate changes due to their shorter maturity and, hence, lower duration. As they are paid off in just a few years, they leave a very limited window for default or large price fluctuations. Therefore, these funds are considered low-risk, low-volatility instruments and are preferred by investors when they believe rates have not topped off or will stay high. On the other hand, long-term bonds are more sensitive to interest rate fluctuations and have higher duration. That's because the longer the maturity, the higher the potential for large price fluctuations, given interest rate changes. These bonds are preferred by investors when rates are believed to have topped off and a cutting cycle will start soon. Liquidity: Short-term bonds are generally more liquid than long-term bonds, meaning they can be bought or sold more easily. That's because the market for short-term bonds is more active. Long-term bonds can be less liquid, especially during economic uncertainty or market volatility, as seen currently. Some of the best performing short-term bond funds are iShares 1-3 years Treasury Bonds ETF (SHY), Schwab Short-Term US Treasury ETF (SCHO) and Vanguard Short-Term Treasury ETF (VGSH). These exchange-traded funds have large assets under management, a low expense ratio and strong overall performance. For context, the above-mentioned ETFs have given a total return of approximately 4 per cent over one year compared to -3 per cent return of the iShares 20+ Year Treasury Bond ETF (TLT). In September 2024, the US Federal Reserve began its first rate cut in four years, bringing the target rate to 4.25 per cent to 4.5 per cent by December. The outlook for 2025 predicts stronger growth and lower unemployment. However, the inflation forecast was raised from 2.2 per cent to 2.5 per cent, higher than the Fed's target of 2 per cent. Given the current market conditions, it is estimated that US yields are likely to stay high, within a range of 4 per cent to 4.75 per cent for the coming year, according to Morgan Stanley. With solid economic growth, a stable unemployment rate and sticky inflation expectations, enthusiasm for long-duration bonds has reduced as rate-cut expectations for the year have come down. Markets now have a wait-and-watch approach as they evaluate economic conditions and the likely impact of US President Donald Trump's policies, with around two rate cuts priced in by the markets. Moreover, the US government is running a deficit (spending more than earnings in taxes) of almost $2 trillion and is expected to continue to do so. Hence, it would need to issue bonds to fund this deficit, a large portion of which would be long-maturity bonds (10 to 30 years). An increased supply of long-dated bonds would put downward pressure on prices and keep rates on longer-term bonds high. Additionally, investors are asking for higher returns on long-term bonds because they want to be compensated for risks like inflation or changes in the economy over time. Moreover, it is expected that the rates on 10-year bonds could rise by about 1.3 per cent, further putting pressure on long-term bond prices. All these factors together suggest that yields on long-term bonds are likely to stay elevated and volatile in the coming months, making short-term bonds a compelling investment option. Moreover, investing in short-duration funds provides investors with the potential for consistent income while maintaining flexibility during uncertain times and can also help to lock in higher yields. Vijay Valecha is chief investment officer at Century Financial
