Summary: Australian investors can buy U.S. Treasuries, including Bonds, Bills, and ETFs, to diversify their portfolios. Different platforms regulated by the Australian Securities and Investments Commission (ASIC) offer a range of payment options and fee structures.
While various US Treasury ETFs cater to different risk and reward profiles, consultation with a financial advisor is recommended for tailored advice. Platforms like eToro provide a secure and efficient avenue for these investments across durations such as the 1-3 Months US Treasury Bill up to the 10-year US Treasury note ETF.
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Can I Buy US Treasuries in Australia?
Yes, Australian investors can buy US treasuries, including Treasury Bonds, Treasury Bills, and Treasury ETFs that pay out a dividend yield. These investments can be accessed through popular stock trading platforms in Australia, regulated by the Australian Securities and Investments Commission (ASIC). Payment methods such as EFT bank transfers, PayID, and credit cards are commonly available for purchasing these secure US government debt instruments.
How to Buy US Treasuries in Australia
When investing in US Treasury ETFs from Australia, selecting the right platform that aligns with your financial goals and risk tolerance is crucial. eToro, a reputable and ASIC-regulated platform, provides an ideal avenue for accessing various US Treasury ETFs that cover T-Bills, T-Notes, and T-Bonds.
Follow this step-by-step guide:
- Sign up for an eToro account and verify your personal, business or SMSF account.
- Click the 'Deposit Funds' button to deposit Australian Dollars (AUD) through popular payment methods.
- Select 'AUD' and your preferred payment method, then transfer funds from your Australian bank account.
- Use the search bar to locate your chosen US Treasury ETF, such as short-term SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), moderate duration iShares 1-3 Year Treasury Bond ETF (SHY) and others. You must leave your leverage at 1x and not increase it, which would turn it into a CFD.
What is the Best US Treasury ETF?
Determining the "best" US Treasury ETF depends on your specific investment goals, risk tolerance, and financial situation. Different Treasury ETFs focus on various parts of the yield curve, from short-term T-Bills to intermediate T-Notes and long-term T-Bonds, each with different risk and reward profiles.
Here are some prominent US Treasury ETFs available on eToro that investors might consider, each with its unique characteristics:
- SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): Ideal for risk-averse investors, focusing on short-term U.S. Treasury Bills, and provides low interest-rate risk. Paid out a 5.15% yield in August 2023.
- iShares 1-3 Year Treasury Bond ETF (SHY): Targets Treasury Bonds with 1-3 year maturities, offering a balance of yield and interest-rate sensitivity. Paid out a 4.88% yield in August.
- iShares 20+ Year Treasury Bond ETF (TLT): Suitable for those seeking higher yields and willing to accept greater interest rate risk, investing in long-term Treasury Bonds. Paid out a 4.25% yield in August.
- Vanguard Intermediate-Term Treasury ETF (VGIT): Invests in U.S. Treasury Bonds with intermediate maturities, balancing yield and risk. The VGIT paid a 4.34% yield as of August 2023.
Investors may also consider hedged or unhedged variants depending on their currency preferences and risk tolerances. When selecting a Treasury ETF for your needs, its important that you first consult with a financial advisor and conduct thorough research.
What are the Fees?
When trading US Treasury ETF, the fee structure can vary based on several factors such as the platform you use, the type of trade, the instrument, and the user's country of residence. Here's a general overview of the fees that may apply to our recommended broker:
- Spread Fees: These are the costs that arise from the difference between the buying and selling price of the ETF. Spreads can fluctuate based on market conditions and the specific ETF you choose.
- Conversion Fees: If you're trading in a currency different from that of the ETF, you may be subject to currency conversion fees. This fee can vary by trading platform and the currency pairs involved.
- Withdrawal Fees: Most trading platforms charge a fixed fee for withdrawing funds from your account. The fee can depend on your withdrawal method and the currency used.
- Inactivity Fees: If an account remains inactive for a specified period, some platforms will charge an inactivity fee as outlined in their terms and conditions.
- Overnight Fees: If you hold leveraged positions, you may incur overnight or swap fees. However, these fees typically don't apply to non-leveraged, long-term investments in US Treasury ETFs.
- ETF Instrument Fees: Regardless of the trading platform you use, each US Treasury ETF will likely have an internal management fee, commonly known as the expense ratio. This fee is indirectly charged and is already included in the ETF's price.
Always check with your chosen trading platform for the exact fee structure, and consider these costs when planning your investment in US Treasury ETFs to make well-informed decisions.
How to Invest in Australian Treasury Bonds
To invest in Exchange-traded Australian Government Bonds (eAGBs), you first need a CHESS-sponsored account from an ASX-licensed broker. eAGBs come in two types: Exchange-traded Treasury Bonds (eTBs) and Exchange-traded Treasury Indexed Bonds (eTIBs). These can be traded on the ASX similarly to shares.
The minimum investment requirement is one unit, equivalent to $100 face value. Before investing, it's essential to seek independent financial advice and read the Investor Information Statement and Term Sheets. Be aware that brokerage fees may apply.
Current yields for Australian Government Bonds are as follows: The 2-Year Yield is at 3.80%, the 5-Year Yield also stands at 3.80%, the 10-Year Yield is at 4.04%, and the 15-Year Yield is at 4.29%. These yields are important indicators to consider in your investment strategy.
In summary, investing in US Treasuries is a viable option for Australian investors, offering an avenue for portfolio diversification with varying risk and reward profiles. While it's crucial to understand the associated fees and consult a financial advisor for tailored advice, platforms such as eToro provide a secure and efficient way to gain exposure to these instruments. Being an ASIC-regulated entity, eToro offers added trustworthiness for investors looking to venture into the world of US Treasury ETFs.