U.S. Treasury Bond

U.S. Treasury bond (treasuries) based mutual funds and ETFs invest in debt... U.S. Treasury bond (treasuries) based mutual funds and ETFs invest in debt securities issued the U.S. government to fund its different services and programs. Treasuries can be issued across a range of maturities, from short-term (i.e. 3-months, which are called Treasury Bills) to long-term (i.e. up to 30 years). In addition to a range of maturities, treasuries can be classified according to different strategies, such as floating rate debt and Treasury Inflation-Protected Securities (TIPS). Floating-rate debt adjusts to changes in an underlying reference rate, whereas TIPS can protect an investor’s principal amount by adjusting to inflation, typically measured by the Consumer Price Index (CPI). Treasuries are generally regarded as safe investments, in the sense that investors are confident the government will not default on either its interest or principal obligations.For this reason, compared to other similarly structured debt securities, treasuries have better ratings from credit rating agencies and tend to be a key component of conservative fixed-income portfolios. Due to their safety net, treasuries generally yield less than riskier securities (such as investment-grade and high-yield corporate debt), but an investor’s principal amount remains more secure. They are not without risks, however, as rising interest rates—particularly for long-term Treasury bonds—will cause a fall in the market value of these securities. Last Updated: 11/25/2024 View more View less

U.S. Treasury bond (treasuries) based mutual funds and ETFs invest in debt securities issued the U.S. government to fund its different services and programs. Treasuries can be issued across a range of maturities,... U.S. Treasury bond (treasuries) based mutual funds and ETFs invest in debt securities issued the U.S. government to fund its different services and programs. Treasuries can be issued across a range of maturities, from short-term (i.e. 3-months, which are called Treasury Bills) to long-term (i.e. up to 30 years). In addition to a range of maturities, treasuries can be classified according to different strategies, such as floating rate debt and Treasury Inflation-Protected Securities (TIPS). Floating-rate debt adjusts to changes in an underlying reference rate, whereas TIPS can protect an investor’s principal amount by adjusting to inflation, typically measured by the Consumer Price Index (CPI). Treasuries are generally regarded as safe investments, in the sense that investors are confident the government will not default on either its interest or principal obligations.For this reason, compared to other similarly structured debt securities, treasuries have better ratings from credit rating agencies and tend to be a key component of conservative fixed-income portfolios. Due to their safety net, treasuries generally yield less than riskier securities (such as investment-grade and high-yield corporate debt), but an investor’s principal amount remains more secure. They are not without risks, however, as rising interest rates—particularly for long-term Treasury bonds—will cause a fall in the market value of these securities. Last Updated: 11/25/2024 View more View less