How to Buy US Treasuries in Europe

Summary: European investors can broaden their investment horizons by venturing into U.S. Treasuries, encompassing Bonds, Bills, and ETFs. There are several trading platforms compliant with the respective financial regulatory bodies in Europe, facilitating easy transactions with a range of payment options, including EUR deposits.

Various US Treasury ETFs cater to different risk and reward preferences. Platforms like eToro, regulated in numerous European countries, provide opportunities to invest in various durations, from short-term avenues such as the 1-3 Months US Treasury Bill ETF to extended options like the 20-year US Treasury note ETF.

Can I Buy US Treasuries in Europe?

Yes, European investors can invest in US Treasuries, including Treasury Bonds, Treasury Bills, and Treasury ETFs that offer dividend yields. You can secure these respected US government debt securities through regulated stock trading platforms in Europe, licensed by appropriate financial authorities in the European Economic Area (EEA). Common payment methods to invest include bank wire transfers, SEPA payments, and debit cards, facilitating an easy avenue for Europeans to integrate these American financial assets into their portfolios.

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How to Buy US Treasuries in Europe

Diving into the world of US Treasuries from Europe is a straightforward process, but it starts with choosing the right trading platform that meets the regulatory standards in your area. eToro, a well-known and regulated platform worldwide, emerges as a top-notch option for accessing a broad range of US Treasuries. Here, you can find investment opportunities such as the short-term SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) or the medium-term iShares 1-3 Year Treasury Bond ETF (SHY), among others.

Here’s an easy-to-follow guide to get you started:

1. Create an eToro account and complete the necessary identity checks.
2. Next, click on 'Deposit Funds' to add Euros (EUR) to your account using popular payment methods in Europe.
3. Select 'EUR' as your chosen currency and pick a convenient payment method like SEPA or wire transfers to transfer funds from your European bank account.
4. Finally, use the search tool to find the US Treasury ETF that matches your investment goals.

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Best US Treasuries for European Investors

Finding the right US Treasury ETF is a personal choice, depending on your financial goals, comfort with risk, and your current financial situation. ETFs come in various forms, focusing on different parts of the yield curve, from short-lived T-Bills to long-lasting T-Bonds, each with its own risk and return characteristics.

Here are a few US Treasury ETFs that might catch the eye of European investors:

• SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): A top pick for cautious investors, this focuses on short-term U.S. Treasury Bills. It had a 5.15% yield as of August 2023.
• iShares 1-3 Year Treasury Bond ETF (SHY): This ETF is great for those looking to strike a balance between yield and interest rate risk, targeting 1-3 year maturities. It showed a 4.88% yield in August 2023.
• iShares 20+ Year Treasury Bond ETF (TLT): If you're in for a potentially higher return and can stomach more risk, this ETF, focusing on long-term bonds, might be for you. It reported a 4.25% yield in August 2023.
• Vanguard Intermediate-Term Treasury ETF (VGIT): Centering on mid-term maturities, it offers a nice balance of risk and return, yielding 4.34% in August 2023.

Additionally, you can opt between currency-hedged or unhedged versions depending on your views on currency fluctuations and risk tolerance. Remember, before you choose, it's wise to chat with a financial advisor and thoroughly research.

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What are the Fees?

Trading US Treasury ETFs on different platforms may incur varying fees, influenced by several factors including the investor's location and the specific financial instrument traded. Below, we detail the potential fees you might encounter while using eToro:

• Zero Commission: eToro offers commission-free trading on US Treasury ETFs, except for short or leveraged positions.
• FX Fees: You'll encounter currency conversion fees if you transact in currencies other than USD.
• Market Spread: Each trade involves a market spread, the gap between the selling and buying prices, although this isn't a fee charged by eToro.
• CFD Overnight Fees: Leveraged positions held overnight incur fees, determined by the 1-month USD LIBOR rate.
• Weekend Fees: Holding positions over the weekend costs triple the overnight fee, typically billed on Fridays.

Before investing, scrutinize eToro's fee structure to understand all potential costs and make well-informed investment choices.

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Bottom Line

Taking the step to invest in U.S. Treasuries is a great way for European investors to expand their portfolios. Platforms like eToro, which are fully regulated in Europe, make it easy to access a range of investment options, from short-term to long-term bonds, all tailored to different risk and reward preferences. 

Before you start, it's essential to take a close look at your financial goals and the fees that might apply. Don't forget to seek advice from a financial advisor and thoroughly research your options. By making well-informed choices, you can seamlessly add U.S. Treasuries to your investment plan, paving the way for potential financial growth.