Move to the Ultra-Short End of the Maturity Curve With CLTL and PVI

Ultra-short treasuries are becoming more relevant and attractive in the current environment than in years past. 

As advisors look to bolster portfolios with fixed income ETFs, the lesser-known Invesco VRDO Tax-Free ETF (PVI) and the Invesco Treasury Collateral ETF (CLTL) should be considered. 

CLTL is a vanilla, low-cost offering, charging just 8 basis points. The fund combines the safety of debt backed by the U.S. government with an ultra-short-term portfolio that guards against interest rate increases.

CLTL is based on the ICE U.S. Treasury Short Bond Index and will invest at least 80% of its total assets in the components of the index. The index measures the performance of U.S. Treasury Obligations with a maximum remaining term to maturity of 12 months. 

CLTL does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective. CLTL and the index are rebalanced and reconstituted monthly, according to Invesco.

PVI offers exposure to the ultra-short end of the maturity curve, focusing on tax-exempt Variable Rate Demand Obligations, or VRDOs. VRDOs trade as short-term municipal money market securities with zero duration.

PVI, which charges 25 basis points, has been around since 2007 but is seeing a resurgence in investor interest in the current rising interest rate environment. 

PVI is essentially a tax-exempt muni money market ETF, meaning it has virtually no interest rate risk and weekly resets. Those resets have become much more attractive in the current environment, offering around 2.5%, according to Invesco. On a taxable equivalent yield, that’s over 4%.

PVI is based on the ICE US Municipal AMT-Free VRDO Constrained Index. Similarly to CLTL, PVI utilizes a “sampling” methodology to seek to achieve its investment objective. The fund is rebalanced on the last calendar day of the month.

For more news, information, and strategy, visit the Innovative ETFs Channel.

https://www.etftrends.com/innovative-etfs-channel/move-to-the-ultra-short-end-of-the-maturity-curve-with-cltl-and-pvi/

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