Treasury Bond ETFs In Focus Amid Rising Rate Volatility (SHY)

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May 24, 2017 1:20pm NYSE:SHY

NYSE:SHY | News, Ratings, and Charts

Yesterday’s call activity in an intermediate duration fund IEF (iShares 7-10 Year Treasury Bond, Expense Ratio 0.15%) sparked some reader inquiries in the Fixed Income ETF space in general, so we will stay on the topic in today’s piece.

As far as straight “U.S. Treasury Bonds” go, iShares has a tight grip on the space as far as sponsoring the top six funds in the category in terms of asset size. Examining the asset levels in some of these funds, and then looking at the duration of the bonds and the trend of fund flows, can give us some nice insight in terms of where and how bond investors are positioning themselves in an environment of high interest rate volatility.

SHY (iShares 1-3 Year Treasury Bond, Expense Ratio 0.15%, $10.9 billion in AUM) is the largest fund in the “Treasury” category and has seen very flat flows year-to-date. IEF, we which mentioned yesterday in the context of near term call activity, is the second largest fund here with $7.6 billion in AUM and small outflows year-to-date of about $45 million.

IEI (iShares 3-7 Year Treasury Bond, Expense Ratio 0.15%, $6.8 billion in AUM), TLT (iShares 20+ Year Treasury Bond, Expense Ratio 0.15%, $6.7 billion in AUM), SHV (iShares Short Treasury Bond, Expense Ratio 0.15%, $4.7 billion in AUM), and GOVT (iShares Core U.S. Treasury Bond, Expense Ratio 0.15%, $4.1 billion in AUM) round out the top six funds in the space, again, all from the sponsor iShares.

It is not until the seventh spot in the “Treasury Bond” category where we see a fund from an issuer other than iShares, and that fund is the popular Levered Bear TBT (ProShares UltraShort Barclays 20+ Year Treasury, Expense Ratio 0.93%, $2.1 billion in AUM), which has picked up over $200 million in new assets via creation in 2017.

Bond giant Vanguard cannot be found on this list until the 10th and 11th spots in terms of fund asset sizes, with the $1.4 billion VGSH (Vanguard Short-Term Government Bond, Expense Ratio 0.07%) and the $1.1 billion VGIT (Vanguard Intermediate-Term Government Bond, Expense Ratio 0.07%), as it seems that Vanguard has a stronger presence in “Total Bond Market” funds judging by AUM levels.

With the interest rate markets continuing to display volatility, we fully expect to continue to see action in the Treasury market throughout the summer.


The iShares Barclays 1-3 Year Treasury Bond Fund (NYSE:SHY) was trading at $84.52 per share on Wednesday afternoon, down $0.02 (-0.02%). Year-to-date, SHY has gained 0.08%, versus a 7.45% rise in the benchmark S&P 500 index during the same period.

SHY currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 27 ETFs in the Government Bonds ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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