How to Buy US Treasuries in the UK

Summary: UK investors looking to broaden their investment scope can consider U.S. Treasuries, including Bonds, Bills, and ETFs, as viable options. Numerous trading platforms regulated by the UK's Financial Conduct Authority (FCA) provide these investment opportunities, with convenient payment methods including GBP deposits. These platforms offer a range of US Treasury ETFs, each tailored to different risk and return preferences. 

Platforms like eToro, adhering to FCA regulations, offer investment choices spanning various maturities, from short-term instruments like the 1-3 Month US Treasury Bill ETF to longer-term options such as the 20-Year US Treasury note ETF.

Can I Buy US Treasuries in the UK?

Certainly, UK residents can invest in US Treasuries, including Treasury Bonds, Bills, and ETFs featuring dividend yields, through established trading platforms regulated by the UK's Financial Conduct Authority (FCA). These UK-based brokers ensure a secure and compliant investment process. Investors can use BACS transfers, Faster Payments, or credit cards for these transactions, offering a straightforward way to add US government debt securities to their investment mix.

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How to Buy US Treasuries in the UK

To invest in US Treasuries from the UK, start by choosing a regulated trading platform like eToro, renowned for its adherence to global regulations and a broad selection of US Treasury investment options. eToro provides access to a diverse portfolio including various US Treasuries, offering choices from short-term options like the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) to medium-term alternatives like the iShares 1-3 Year Treasury Bond ETF (SHY).

Here are the steps to begin investing:

1. Account Creation: Sign up for an eToro account and undergo the mandatory identity verification process.
2. Adding Funds: Click on 'Deposit Funds' to transfer British Pounds (GBP) into your eToro account. You can use UK-specific payment methods like Faster Payments or BACS for this.
3. Currency Selection: Choose 'GBP' as your preferred currency and select a payment method such as a UK bank transfer to add funds to your account.‍
4. ETF Selection: Employ eToro's search tool to find the US Treasury ETF that best matches your investment goals.

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Best US Treasury ETF for UK Investors

Selecting the most suitable US Treasury ETF depends on individual financial objectives, risk tolerance, and economic circumstances. Various ETFs cater to different parts of the yield curve, from short-term Treasury Bills to long-term Treasury Bonds, each presenting distinct risk and return profiles.

UK investors might consider these US Treasury ETFs:

• SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): Ideal for conservative investors, this ETF concentrates on short-term U.S. Treasury Bills. As of February 2024, it had a yield of 5.36%.
• iShares 1-3 Year Treasury Bond ETF (SHY): This ETF, targeting 1-3 year maturities, offers a blend of yield and controlled interest rate risk. In February 2024, it yielded 4.27%.
• iShares 20+ Year Treasury Bond ETF (TLT): Suited for investors seeking higher returns and comfortable with increased risk, this ETF invests in long-term bonds, with a yield of 4.15% in February 2024.
• Vanguard Intermediate-Term Treasury ETF (VGIT): Targeting mid-term maturities, it offers a balanced yield-risk proposition, yielding 4% as of February 2024.

Investors can also select between currency-hedged and unhedged options, depending on their currency preferences and risk appetites. It is essential to consult with a financial advisor and conduct thorough research before making an investment decision.

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What are the Fees?

The costs associated with trading US Treasury ETFs vary based on factors like the chosen trading platform, trade type, specific financial instrument, and the trader's location. Here’s a brief guide to the fees you may encounter with eToro, our recommended broker:

• No Commission Trading: eToro offers commission-free trading on US Treasury ETFs, except in cases of short or leveraged positions.
• Market Spread: This refers to the difference between the bid (sell price) and ask (buy price) for each US Treasury ETF trade. Although not a direct eToro fee, it's a cost to consider.
• CFD Overnight Charges: For leveraged positions held open overnight, these fees apply, calculated based on the 1-month USD LIBOR rate.
• Weekend Charges: Positions held open over the weekend incur triple the standard overnight fee, typically charged on Fridays for most ETFs.
• Expense Ratio: This annual fee, expressed as a percentage of the ETF's assets, covers the fund's total operating expenses.

UK traders should thoroughly examine eToro's detailed fee structure to grasp any additional general or specific costs. Fully understanding these fees aids in making more informed investment decisions. Be aware that trading involves risk to your capital.

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Bottom Line

In summary, for UK investors seeking portfolio diversification, U.S. Treasuries present a solid opportunity. Accessible through FCA-regulated platforms like eToro, these options include a range of ETFs, catering to various risk and return profiles. From short-term Treasury Bills to long-term Bonds, investors can find instruments that align with their financial goals. While eToro offers commission-free trading, it's important to consider other potential costs like market spreads, overnight charges, and expense ratios.