New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

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Rosales
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New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by Rosales »

Has anyone noticed the appearance of this new ETF? Looks like a substitute to a money-market fund.
TER 0.07%
https://americas.vanguard.com/instituti ... ocId=30807
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glorat
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by glorat »

Before considering this, I would compare the bid/ask spreads of this vs the well established iShares one.

If using like a MMF, I'd certainly want to be able to get in and out cheaply
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Maple
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by Maple »

Good to have Vanguard (VDST) and iShares (IB01) competing directly in this space.

The current bid/offer spread at this instant, for both ETFs on the LSE, is equivalent to 0.04%.
Valuethinker
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by Valuethinker »

Rosales wrote: Sun Sep 13, 2020 2:26 pm Has anyone noticed the appearance of this new ETF? Looks like a substitute to a money-market fund.
TER 0.07%
https://americas.vanguard.com/instituti ... ocId=30807
I assume this is to simulate a Money Market Funb but it can "break the buck"?
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gasman
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by gasman »

Valuethinker wrote: Mon Sep 14, 2020 7:11 am
Rosales wrote: Sun Sep 13, 2020 2:26 pm Has anyone noticed the appearance of this new ETF? Looks like a substitute to a money-market fund.
TER 0.07%
https://americas.vanguard.com/instituti ... ocId=30807
I assume this is to simulate a Money Market Funb but it can "break the buck"?
On the flip side, it is also a way to attempt to squeeze a few basis point of return with zero/minimal risk as compared to a MM fund. Especially a Treasury MM fund.
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Maple
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by Maple »

Valuethinker wrote: Mon Sep 14, 2020 7:11 am I assume this is to simulate a Money Market Funb but it can "break the buck"?
I don't see, or expect, any guarantee of capital preservation from these funds. Only expect less interest rate risk due to short term and high credit debt holdings. Correspondingly, for a low risk ETF, the yields are tiny.
megatron1911
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by megatron1911 »

I would see this range of maturities as a pure cash replacement, given the security of short term T-bills/bonds and in case I don't want to have too much cash in my brokerage/bank account, either for bail-in reasons or US estate tax risk (like so many here seem to have with IB)

But if I do already consider this asset class for security reasons, I'd also want to have a product that does NOT engage in securities lending. Both Vanguard and iShares do lend out. The only big one not doing so is SPDR (for example IE00BJXRT698). But they are slightly more expensive and/or less liquid.

Btw, does anybody own T-bills/bonds directly? Through IB for example? And rolls them over at maturity? They are not considered US situs, even though I read something about maturities of less than 6 months which interestingly are.

edit: tenors of less than 6 months used to be considered US situs, but apparently not any more: "debts of U.S. obligors. Once again, however, publicly traded bonds issued after July 18, 1984 qualify as "portfolio debt" and therefore are not subject to U.S. estate taxation. (I.R.C. § 2105 (b)(3)) Previously, only bonds with a maturity of more than 6 months qualified for the estate tax portfolio debt exemption, so that short-term Treasury bills, for example, were U.S. situs assets. However, this distinction was eliminated by the Taxpayer Relief Act of 1997, and bonds now qualify for the portfolio debt exemption regardless of maturity." https://www.mondaq.com/unitedstates/inc ... ry-outline)
DJN
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by DJN »

Hi,
I willl add to the Wiki for non-US investors in the section on Bond basics for non-US investors and in the section on Cash Equivalents for EU investors, see sections here:
https://www.bogleheads.org/wiki/Bond_ba ... _investors
https://www.bogleheads.org/wiki/Cash_eq ... _investors
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
Valuethinker
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Re: New Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF (Acc)

Post by Valuethinker »

Maple wrote: Mon Sep 14, 2020 8:20 pm
Valuethinker wrote: Mon Sep 14, 2020 7:11 am I assume this is to simulate a Money Market Funb but it can "break the buck"?
I don't see, or expect, any guarantee of capital preservation from these funds. Only expect less interest rate risk due to short term and high credit debt holdings. Correspondingly, for a low risk ETF, the yields are tiny.
Cash Funds/ MMFs are much less common in Europe than USA (although institutions use them).

I don't remember off hand how Europe chose to align with USA in post crash reforms to MMFs. US MMFs used to never "break the buck" but have now been subdivided into 2 categories, only one of which has that stipulation?

For institutions, a few basis points on hundreds of millions of dollars works out to real money.
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