WisdomTree Announces Launch of 1-3 Year Laddered Treasury (USSH) and 7-10 Year Laddered Treasury (USIN) Funds
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Insights
The launch of WisdomTree's new funds, USSH and USIN, introduces products that cater to investors seeking to diversify their portfolios with fixed-income securities, specifically U.S. Treasury obligations. The choice of laddered Treasury funds is particularly noteworthy. A laddered portfolio is designed to reduce interest rate risk by distributing investments across various maturities. As interest rates rise, the shorter-term securities in the ladder can be reinvested at higher rates, potentially offsetting the price decline of longer-term bonds.
This strategy may be attractive during periods of interest rate volatility, as the Federal Reserve adjusts rates to manage economic growth and inflation. The expense ratio of 0.15% for both funds is competitive, potentially making these funds a cost-effective option for investors. However, investors must weigh the lower risk and stability offered by Treasuries against the typically lower yields compared to other fixed-income securities.
WisdomTree's expansion into different segments of the Treasury yield curve with USSH and USIN reflects a strategic move to capitalize on the current interest rate environment. By offering products that cover both short-term (1-3 years) and intermediate-term (7-10 years) maturities, WisdomTree provides investors with tools to manage duration risk and to position their portfolios according to their expectations for interest rate movements.
Furthermore, the launch of these funds could be seen as a response to investor demand for higher quality income streams and risk management solutions in a 'normalizing' yield environment. The funds' structure allows for regular rebalancing, which ensures that the portfolio remains aligned with the target maturity bands, a feature that might appeal to investors looking for systematic risk management.
It is essential for investors to understand the risks associated with new investment vehicles such as USSH and USIN. The funds' prospectuses will detail the specific risks, including interest rate risk, credit risk, inflation risk and reinvestment risk. As these are new offerings, they lack historical performance data, which can typically serve as one indicator of potential future performance. Investors must rely on the broader track record of the fund manager and the inherent stability of U.S. Treasury securities.
Additionally, the funds' adherence to the Bloomberg U.S. Treasury Laddered Indexes ensures a degree of transparency and predictability in their investment approach. However, any changes in the financial condition or credit rating of the U.S. government could impact the value of these funds, a risk that is particularly pertinent given ongoing discussions about the U.S. debt ceiling and fiscal policy.
USSH and USIN are centered around the short-term (1-3 years) and intermediate-term (7-10 years) parts of the
“We’re excited to launch USSH and USIN, strategically expanding our Treasury suite of funds and enabling WisdomTree to now offer even more diverse options to investors for different rate settings,” said Kevin Flanagan, Head of Fixed Income Strategy at WisdomTree. “These Funds are straightforward, utilizing a time-tested fixed-income type of strategy. In an environment where fixed income yields have returned to more ‘normal’ levels, investors can now take advantage of this new rate regime by obtaining risk-mitigated yield in Treasuries.”
USSH and USIN: What’s Under the Hood?
The WisdomTree 1-3 Year Laddered Treasury Fund (USSH) and the WisdomTree 7-10 Year Laddered Treasury Fund (USIN) seek to provide targeted laddered exposure to the most recently issued Treasuries in those ranges:
- Equally weighted across the months and quarters in the 1-3 year and 7-10 year maturity bands, respectively
- For USSH, securities move in and out of the index each month, while USIN rotates securities on a quarterly basis in line with Treasury issuance patterns (February, May, August, and November).
- At each reconstitution, the shortest maturity falls out and the newly auctioned note is added for both funds. Additionally, for USSH, seasoned 3-year Treasury notes will also fall out to accommodate newly auctioned 2-year notes.
- For each fund, the underlying index re-establishes equal weighting at the end of each month.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Funds before investing. To obtain a prospectus or, if available, the summary prospectus containing this and other important information, please call 866.909.9473 or visit WisdomTree.com/investments. Investors should read the prospectus or, if available, the summary prospectus carefully before investing.
WisdomTree Funds are distributed by Foreside Fund Services, LLC.
Kevin Flanagan is a registered representative of Foreside Fund Services, LLC.
Important Risk Information
There are risks associated with investing, including possible loss of principal. Because the Funds are new, there is no performance history. Investing in
About WisdomTree
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Media Relations
WisdomTree, Inc.
Jessica Zaloom
+1.917.267.3735
jzaloom@wisdomtree.com / wisdomtree@fullyvested.com
Source: WisdomTree, Inc.
FAQ
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