GOVT is a total U.S. Treasury bond market ETF from iShares that covers the entire yield curve. But is it a good investment? I review it here.
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GOVT Methodology and Fees
GOVT from iShares is the only ETF I know of for the total U.S. treasury bond market. It launched in late 2012 and has since amassed nearly $22 billion in assets.
GOVT tracks a market-weighted index for fixed-rate U.S. treasury bonds for maturities between 1 year and 30 years. As such, it has an effective intermediate weighted average maturity of about 8 years.
As of 2016, GOVT tracks the ICE U.S. Treasury Core Bond Index. Previously it tracked the Barclays U.S. Treasury Bond Index.
I've gone into detail elsewhere about how treasury bonds should probably be preferable to corporate bonds in a portfolio with stocks due to their inherently lower correlation and lower risk profile, among other things. Some may not realize that total bond market funds like BND and AGG contain about 25% corporate bonds.
Bogleheads usually like to stick to broad total market index funds from Vanguard. Unfortunately, Vanguard does not have a total treasury bond market product. GOVT provides a solution for the index investor who wants a total market fund but who also wants to stick to U.S. treasuries instead of the total bond market.
At the time of writing, GOVT has 127 holdings, a 30 day SEC Yield of 3.97%, and an expense ratio of 0.05%.
GOVT Maturity Breakdown
For those who care, here's the maturity breakdown of GOVT:
Is GOVT a Good Investment?
So is GOVT a good investment? Maybe.
Again, I think GOVT is a great solution for the index investor who prefers to stick with U.S. treasury bonds as opposed to a total bond market fund that includes corporate debt issues. Clearly there are many of those investors, evidenced by the fund's billions of dollars in assets.
These benefits are more significant than they may initially sound. The simplicity of simply “owning the market” and taking the guesswork out of choosing a particular part of the treasury yield curve – all at a relatively low fee of 0.05% – can be extremely valuable. With GOVT, you own the whole curve.
For these reasons, this fund still gets the Bogleheads stamp of approval even though it's not from Vanguard.
Usually, your effective bond duration should depend on your personal goal(s), time horizon, risk tolerance, and other investments, so GOVT may or may not be suitable for you. As a total treasury market fund, GOVT may be attractive for both the well-diversified young investor and the retiree who needs current income.
Conveniently, GOVT should be available at any major broker, including M1 Finance, which is the one I'm usually suggesting around here.
What do you think of GOVT? Do you own it? Let me know in the comments.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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