How to Buy US Treasuries in Europe

Can I Buy US Treasuries in Europe?

Yes, European investors can buy US Treasuries, including Treasury Bonds, Bills, and ETFs with dividend yields. These investments are available through regulated stock trading platforms in Europe, which adhere to European Economic Area (EEA) financial regulations. Investors can use bank wire transfers, SEPA payments, or debit cards to make these purchases, making it straightforward to add US government debt securities to their portfolios.

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How to Buy US Treasuries in Europe

To invest in US Treasuries from Europe, start by choosing a regulated trading platform like eToro, known for global compliance and a wide range of US Treasury options. eToro provides access to over 4,500 assets, including various US Treasuries, such as the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) and the iShares 1-3 Year Treasury Bond ETF (SHY).

Follow these steps to begin investing:

1. Account Setup: Register for an eToro account and complete the identity verification process.
2. Fund Deposit: Click 'Deposit Funds' to add Euros (EUR) to your eToro account. Use familiar European payment methods for this step.
3. Currency and Transfer: Select 'EUR' as your currency and choose a payment method, such as SEPA or wire transfers, for transferring funds from your European bank account.
4. ETF Selection: Use eToro's search tool to find the US Treasury ETF that matches your investment goals.

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Best US Treasuries for European Investors

Selecting the best US Treasury ETFs for European investors involves evaluating personal financial goals, risk tolerance, and the economic landscape in Europe. Different ETFs cover various segments of the yield curve, from short-term Treasury Bills to long-term Treasury Bonds, each with distinct risk-return profiles.

Here are some recommended US Treasury ETFs:

1. SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): Suitable for risk-averse investors, this ETF focuses on short-term Treasury Bills with a yield of 5.3% as of May 2024.
2. iShares 1-3 Year Treasury Bond ETF (SHY): Targeting bonds with maturities between 1-3 years, this ETF offers a balance of yield and moderate interest rate risk, yielding 4.2% in May 2024.
3. iShares 20+ Year Treasury Bond ETF (TLT): For those seeking higher returns and willing to accept more risk, this ETF invests in long-term bonds and had a yield of 4.1% in May 2024.
4. Vanguard Intermediate-Term Treasury ETF (VGIT): Focused on mid-term maturities, this ETF provides a balanced yield-risk profile, with a yield of 4% as of May 2024.

European investors can choose between currency-hedged and unhedged options, depending on their currency preferences and risk comfort. Consulting a financial advisor and conducting thorough research before investing is essential.

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What are the Fees?

Trading US Treasury ETFs on platforms like eToro involves various fees that can vary based on your location and the specific ETF. It's crucial to consider both platform fees and the ETF's expense ratio. Here’s a detailed look at the fees you might encounter on eToro:

1. Commission Structure: eToro offers commission-free trading for US Treasury ETFs, except for short or leveraged positions.
2. Currency Conversion: Transactions in non-USD currencies incur currency conversion fees on eToro.
3. Market Spread: Trading involves a market spread, the difference between buy and sell prices, which affects the transaction cost, though it's not a direct fee from eToro.
4. Overnight CFD Fees: Holding leveraged positions overnight incurs fees tied to the 1-month USD LIBOR rate.
5. Weekend Charges: Positions held over weekends incur triple the usual overnight fee, typically charged on Fridays.

Additionally, each ETF has an expense ratio, an annual fee expressed as a percentage of your investment, which covers the fund's operating expenses. Reviewing eToro’s fee structure and the ETF’s expense ratio is essential to fully understand the costs associated with your investment.

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Bottom Line

Investing in US Treasuries is accessible for European investors through regulated platforms like eToro, offering a variety of Treasury Bonds, Bills, and ETFs. By understanding the steps to invest, selecting the right ETFs based on financial goals, and being aware of associated fees, European investors can effectively add US government debt securities to their portfolios. Always consider consulting with a financial advisor to ensure these investments align with your overall strategy.