How to Buy US Treasuries in Australia
Discover the process for Australians to invest in US Treasuries, what fees to expect, and how to choose the right ETF for your goals.
Summary: Australian investors can access US Treasuries, including bonds and ETFs, through ASIC-regulated platforms like eToro. Choosing the right platform and specific Treasury products depends on personal financial goals and risk preferences.
Common payment methods such as EFT, PayID, and credit cards simplify the buying process. It's important to consider potential fees and whether to opt for currency-hedged investments.
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Can I Buy US Treasuries in Australia?
Yes, Australian investors can purchase US Treasuries, including Treasury Bonds, Bills, and ETFs with dividend yields. These options are available on well-known stock trading platforms in Australia, overseen by the Australian Securities and Investments Commission (ASIC). Common payment methods like EFT bank transfers, PayID, and credit cards allow for easy purchase of these secure US government debt instruments.
How to Buy US Treasuries in Australia
To invest in US Treasuries from Australia, start by choosing a regulated trading platform, such as eToro, recognised for its adherence to global standards and broad array of US Treasury investment opportunities. eToro provides access to over 4,500 assets, including various US Treasuries, from short-term options like the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) to medium-term choices like the iShares 1-3 Year Treasury Bond ETF (SHY).
Here’s how to get started:
- Account Setup: Create an eToro account and complete the necessary identity verification process.
- Fund Deposit: Click 'Deposit Funds' to add Australian Dollars (AUD) to your account. Utilise common Australian payment methods for this step.
- Currency and Transfer: Select 'AUD' as your preferred currency and choose a payment method such as EFT or PayID to transfer funds from your Australian bank account.
- ETF Selection: Use eToro’s search function to find the US Treasury ETF that meets your investment goals.
What is the Best US Treasury ETF?
Choosing the right US Treasury ETF should align with your personal financial goals, preferred risk level, and complete financial picture. Here’s a selection ranging from short-term T-Bills to long-term T-Bonds, each offering different risk-return profiles:
- SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): Best suited for conservative investors focused on short-term U.S. Treasury Bills.
- iShares 1-3 Year Treasury Bond ETF (SHY): Ideal for those seeking a balance of yield and risk with 1-3 year maturities.
- iShares 20+ Year Treasury Bond ETF (TLT): Targets investors looking for higher potential returns through long-term bonds.
- Vanguard Intermediate-Term Treasury ETF (VGIT): Offers a risk and return balance with its mid-term maturity focus.
In Australia, investors can select ETFs that are either currency-hedged or unhedged based on how they view currency risk. Consulting a financial advisor and conducting diligent research before investing is highly recommended.
What are the Fees?
Trading US Treasury ETFs in Australia on various platforms can involve different fees. These fees depend on the investor's location and the specific financial instruments being traded. Here, we outline the potential fees you might encounter when using eToro in Australia:
- Zero Commission: eToro offers commission-free trading on US Treasury ETFs, except for positions that are short or using leverage.
- FX Fees: Transactions conducted in currencies other than the Australian Dollar may incur currency conversion fees.
- Market Spread: This refers to the difference between the selling and buying prices of a security. Note that this spread is not a direct fee charged by eToro but is inherent in trading.
- CFD Overnight Fees: For leveraged positions held overnight, fees are applied, calculated based on the 1-month USD LIBOR rate.
- Weekend Fees: Positions held over the weekend attract triple the regular overnight fee, typically charged on Fridays.
For investors in Australia, it's essential to thoroughly review eToro’s fee structure to understand all potential costs involved. This ensures that investment decisions are made with full awareness of the financial implications.
How to Invest in Australian Treasury Bonds
To invest in Exchange-traded Australian Government Bonds (eAGBs), you'll need a CHESS-sponsored account from a broker licensed by the ASX. eAGBs are available in two forms: Exchange-traded Treasury Bonds (eTBs) and Exchange-traded Treasury Indexed Bonds (eTIBs), which are traded on the ASX like shares. The minimum investment is one unit, valued at $100 face value. Before making an investment, it's crucial to seek independent financial advice, review the Investor Information Statement, and examine the Term Sheets.
Bottom Line
In summary, Australian investors can readily purchase US Treasuries, including bonds and ETFs, through ASIC-regulated platforms like eToro. These platforms offer a variety of US Treasury products suitable for different investment goals and risk tolerances. When investing, it's important to consider factors such as fees, which vary by platform and transaction type, and whether to opt for currency-hedged or unhedged ETFs. Finally, always consult a financial advisor and perform thorough research to make well-informed investment decisions.