How to Buy US Treasuries in the UK

Summary: UK investors have the opportunity to diversify their portfolios by investing in U.S. Treasuries, including Bonds, Bills, and ETFs. Various trading platforms are available, regulated by the Financial Conduct Authority (FCA), offering a myriad of payment options, notably GBP deposits.

Different US Treasury ETFs suit diverse risk and reward profiles. For instance, eToro, an FCA-regulated platform, allows you to invest across a variety of durations, from short-term options like the 1-3 Months US Treasury Bill to longer-term options like the 20-year US Treasury note ETF.

Can I Buy US Treasuries in the UK?

Yes, UK investors have the opportunity to invest in US Treasuries, encompassing Treasury Bonds, Treasury Bills, and Treasury ETFs that offer dividend yields. You can acquire these highly secure US government debt securities via renowned trading platforms in the United Kingdom, overseen by the Financial Conduct Authority (FCA). Typical payment options for such investments include BACS transfers, Faster Payments, and credit cards, making it convenient for UK residents to diversify their portfolios with these American assets.

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How to Buy US Treasuries in the UK

Investing in US Treasuries from the UK calls for a well-thought-out choice of trading platform that is in line with your investment objectives and risk appetite. eToro, a platform highly-regarded and regulated by the Financial Conduct Authority (FCA), offers a comprehensive range of US Treasuries. Options include short-term SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), moderate-duration iShares 1-3 Year Treasury Bond ETF (SHY), among others.

Here's a step-by-step guide to help you navigate the process:

1. Register for an eToro account and complete the identity verification
2. Click on the 'Deposit Funds' option to add British Pounds (GBP) to your account via commonly used payment methods in the UK.
3. Choose 'GBP' as your currency and select your preferred payment method, such as a BACS transfer, Faster Payments, or credit card, to deposit funds from your UK-based bank account.
4. Utilize the search bar to find the specific US Treasury ETF you're interested in.

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Best US Treasury ETF for UK Investors

Choosing the best US Treasury ETF is a subjective decision, contingent on your financial goals, risk comfort, and fiscal status. Different ETFs target segments of the yield curve, from short-term T-Bills to long-term T-Bonds, each with varying risk and yield.

Here are some US Treasury ETFs that UK investors may consider:

• SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): Best for low-risk investors, focusing on short-term U.S. Treasury Bills. Yielded 5.15% as of August 2023.
• iShares 1-3 Year Treasury Bond ETF (SHY): Targets 1-3 year maturities, balancing yield and interest rate risk. Yielded 4.88% in August 2023.
• iShares 20+ Year Treasury Bond ETF (TLT): For those seeking higher yields and tolerating more risk, invests in long-term bonds. Yielded 4.25% in August 2023.
• Vanguard Intermediate-Term Treasury ETF (VGIT): Focuses on mid-term maturities, offering a yield-risk balance. Yielded 4.34% as of August 2023.

You can also choose between currency-hedged or unhedged versions based on your currency considerations and risk sensitivities. Before making a selection, it’s crucial to consult a financial advisor and conduct comprehensive research.

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What are the Fees?

The fees associated with trading US Treasury ETFs can differ based on various elements, including the trading platform used, the type of trade executed, the particular financial instrument, and even the investor's country of residence. Here's a succinct outline of the fee types that may apply when using our recommended broker, eToro:

• Zero Commission: eToro does not charge a broker fee for trading US Treasury ETFs, except for short or leveraged positions.
• FX Fees: Currency conversion fees apply when you deposit or withdraw funds in currencies other than USD.
• Market Spread: While not a fee levied by eToro, each US Treasury ETF trade is subject to a market spread, essentially the difference between the bid (selling price) and ask (buying price).
• CFD Overnight Fees: These fees apply to leveraged positions that stay open overnight. The rate is influenced by the 1-month USD LIBOR rate.
• Weekend Fees: Triple the overnight fee is charged for keeping positions open over the weekend. This is usually billed on Fridays for most ETFs.

Before investing, UK residents should review eToro’s fee schedule in detail to understand any other general or instrument-specific costs that may apply. This allows for more informed investment decisions. Always remember that your capital is at risk when trading.

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Bottom Line

In summary, UK investors have a golden opportunity to diversify their investment portfolios by including U.S. Treasuries, accessible via FCA-regulated platforms like eToro. With a range of payment options in GBP and a variety of Treasury assets tailored to different risk profiles, the process is both convenient and versatile. Before taking the plunge, it's essential to understand the fee structure and consult a financial advisor to make well-informed decisions that align with your financial goals and risk tolerance.