Thoughts on USTB & AAA ETF’s

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Question asked 28/03/2024

Thoughts on USTB & AAA ETF’s

Happy Easter Team, Please advise which of the above 2 ETFs is a better buy regarding safety & yield. 1) what is the current yield of USTB vs AAA? 2) Is a reduction in interest rate positive for USTB & negative for AAA? Thanks & regards, Sidney

Answer

Hi Sidney,

The Global X US Treasury Bond (currency hedged) (USTB) is currently yielding 2.22% while the BetaShares Australian high interest cash (AAA) is yielding 4.12%. These are very different products from a safety / yield perspective, if rates/yields are stable over the coming year *(s) the AAA ETF is likely to outperform courtesy of its higher yield. Alternatively relative performance will come down to the future direction of interest rates/bond yields. If MM is correct the AAA ETF is the best place to be through 2024 – it is essentially like investing in a cash account.

The AAA and USTB ETF’s have indeed been largely inversely correlated but its the AAA which has preferred lower rates and vice versa.

chart

Global X US Treasury Bond (currency hedged) (USTB) v BetaShares Australian high interest cash (AAA) ETF’s

LAST UPDATED 28/03/2024 13:40

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