ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
    • Crypto ETF Hub
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Leveraged & Inverse ETF Channel
  2. As Fed Eyes Rate Hike, Try Treasury Yield ETF USFR
Leveraged & Inverse ETF Channel
Share

As Fed Eyes Rate Hike, Try Treasury Yield ETF USFR

Nick Peters-GoldenJul 26, 2023
2023-07-26

With the Fed preparing to meet once again this week for a much anticipated rate hike, how should investors respond? The yield curve remains inverted, offering significant opportunities on the front end that investors and advisors can still reap. Whether this rate hike will be the last one or not in the Fed’s ongoing inflation fight, a treasury yield ETF might stand out. Investors may want to consider how the WisdomTree Floating Rate Treasury Fund (USFR A-) can fit the role there.

The Fed sat down to meet Tuesday and looks set for a 25 basis point (bps) hike. That would likely take the rate above its current range of 5% to 5.25% as part of the Fed’s breakneck rate hike pace. Fixed income has come back this year, in turn, but investors don’t need to take huge swings to find solid yields. One strong option to play another rate hike may actually be in USFR, which invests in Floating Rate Notes (FRNs).

Floating Rate Notes are the newest variation on Treasury securities, launched back in 2013. FRNs are indexed to the most recent 13-week Treasury bill auction, held quarterly. FRNs offer quarterly coupons though that can vary. Crucially, the rate attached to an FRN changes as rates change. That means FRNs can benefit from, say, a rate hike.

The Treasury yield ETF USFR uses FRNs to offer a very low risk way into exposure to rates. While that does pose reinvestment risk if rates fall, markets are anticipating further hikes and then, perhaps, a higher for longer regime. These have helped USFR return 2.9% YTD, adding $375 million over the last month.

See more: Treasuries Fund USFR Ready Higher for Longer

USFR charges just 15 bps and currently offers a 5.5% average yield to maturity as of July 24th. That yield, above five, may encourage investors to take a closer look especially if it rises with another rate hike. For those investors looking for a Treasury yield ETF, USFR may be positioned for an intriguing end to 2023.

For more news, information, and analysis, visit the Modern Alpha Channel.


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X