Watch the full interview here
Alex Morris CEO of F/m Investments joined Bloomberg ETF IQ for a conversation on the strong investor demand for U.S. Treasury ETFs, especially long-duration bonds despite recent volatility and historically high yields while also touching on the rise of interest on inflation protection at the short end of the curve.
Key Points:
High Demand for Long Bonds:
- Even though long bonds have been volatile ("a Widowmaker trade"), investors are attracted to yields around 5% and continue to buy.
- Our Benchmark Series of single holding US Treasury ETFs offer long bond options with UTWY (US Treasury 20-Year Bond ETF) and UTHY (US Treasury 30-Year Bond ETF)
Yield Hunters' Behavior:
- Initially, investors favored short-term Treasuries as rates rose.
Now, with long-term rates near 5%, they are willing to extend duration to lock in those yields.
TBIL and Chill... Still:
- Short-end products like TBIL (US Treasury 3-Month ETF) remain popular, with $1.2 billion in inflows year-to-date.
Middle of the Curve (2-5 years):
- Despite being a logical spot for investment, the "belly" of the curve has seen limited investor interest.
- Investors either prefer no risk (short-term) or are willing to take more risk for higher duration/yield (long-term), creating a barbell strategy.
Inflation Concerns Emerging:
- Some investors are looking to move into US Treasury 3-Month ETF as concerns about rising prices return.
- F/m recently launched RBIL the first ETF to invest exclusively and continuously in ultrashort Treasury Inflation-Protected Securities for investors with inflation anxiety.